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Report: BofA To Lose Most From Overdraft Fee Rules

by The Huffington Post on December 20, 2011

Huffington Post…

Try as they may, Bank of America just can’t catch a break. In the latest BofA bad news, it appears that the bank has the most to lose from new fee rules aimed at limiting charges to consumers, according to a research note from Credit Suisse cited by Forbes. A new rule that requires banks get consent before charging customers overdraft fees will cost BofA $3.3 billion per year, compared to the $1.4 billion that Wells Fargo will lose per year and the $1.077 billion JPMorgan Chase stands to lose, the research note finds. The research note comes on the heels of news that BofA’s shares fell below $5 for the first time in years. The slump caps a year of fails for the company including a proposed , but ultimately scrapped , $5 debit card fee that drew criticisms from ordinary consumers, lawmakers and even President Obama . After BofA initially announced the fee, the company’s CEO Brian Moynihan defended it, saying that the bank “has a right to make a profit.” Other bank industry officials expressed similar sentiments including Frank Keating, the president of the American Banker Association, who said that financial reform rules forced banks’ hands in passing off charges to customers. BofA has already lost millions due to some of its fee practices. The bank paid $410 million in May to settle a lawsuit with consumers who claimed the bank charged them excessive overdraft fees. Wells Fargo and Citibank have faced similar suits. Though the research note finds that BofA is slated to lose more than most from the new overdraft rules, banks are still on track to net $16 billion in overdraft fees this year, Businessweek reported in October. That’s down 16 percent from their 2009 peak, thanks in large part to the new regulations. Still, customers are getting hit hard by fees; the average debit card fee remains $35, the same as it was last year , according to the Consumer Federation of America.

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Report: BofA To Lose Most From Overdraft Fee Rules

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Eve Tahmincioglu: Dumb Labor Day advice to workers: Roll over

by on September 6, 2010

The headline in my local newspaper today reads: “Jobless must set sights lower.” I wouldn’t be surprised if your local newspaper or radio station has a similar story today. This is the kind of sensational angle the media loves to focus on during all types of holidays. For example, a Christmas day massacre or a Halloween candy poisoning will get endless attention by editors, especially in this Internet age where all most media care about is how many times you guys click on a story. But on this Labor Day , a time when we’re supposed to be celebrating the advances workers have achieved in the workplace, let’s not just roll over and accept what has become the standard employer line — you have to take less money for more work — and let’s concentrate on what needs to be done to bring back a job market with better quality jobs for the working stiff. Today, President Obama is expected to announce a series of steps to stimulate the economy. Yes, the pundits will be tearing him apart today, saying it’s just a government bailout and the free market needs to do its thing. But if we look back in history, these types of measures the administration is touting are what brought workers back from the brink during another bad economic down turn, the Great Depression. During that time there was a segment of society doing quite well while the regular guys and gals suffered, and during this recession many of those telling workers to accept less and do more are also doing quite well. This from a great opinion piece in the New York Times last week called “How to End the Great Recession,” by Robert Reich , the former labor secretary under Clinton: Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income. It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle. Reich has some suggestions how to make things better: THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field. In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs. By contrast, little has been done since 2008 to widen the circle of prosperity. Health-care reform is an important step forward but it’s not nearly enough. That’s where Obama’s proposals may come in. This news alert just in from Politico.com , according to a White House spokesman: “The president will work with Congress to enact a new up-front investment in our nation’s infrastructure – an investment that would help jump-start additional job creation, while also laying the foundation for future growth. This initial investment would fund improvements in the nation’s surface transportation, as well as our airports and air traffic control system.” The measures include the “establishment of an Infrastructure Bank to leverage federal dollars, and focus on investments of national and regional significance that often fall through the cracks in the current siloed transportation programs,” and “the integration of high-speed rail on an equal footing into the surface transportation program.” It’s hard to tell whether such measures will be enough, and a lot of smart and dumb people will surely be debating this today. But the bottom line is, just encouraging workers to accept a worse lot in life will not reinvigorate the middle class, and it won’t help the economy at large, right? The answer could lie in renewed organizing efforts. Amy B. Dean , co-Author of “A New New Deal: How Regional Activism Will Reshape the American Labor Movement,” in a Huffington Post piece today outlines how unions can help: It takes the organized efforts of working people to reverse these trends toward exclusion and to ensure that each new epoch will bring a shared prosperity. During the transition to the industrial economy, it was not preordained that the auto, steel, or textile industries would provide living wages, health care, pensions, and other benefits that allowed for a stable, thriving middle class in this country. Rather, employees needed to use the institution of collective bargaining to come together, negotiate with their employers, and demand the conditions that would provide a healthy quality of life for working people. Clearly the quality of work life is suffering. The story telling workers to shoot low in my local paper today quoted a worker, Sue Fritz, 49, who works at a state facility helping care for people who have developmental disabilities. “We’re working shorter with less people, and more is being expected of us. It’s a very strenuous day. To have to get up and go back in every morning…you have no choice.” There are choices, and things do change if workers want them to. Let’s go back in time to the first Labor Day. Washington Post blogger Valerie Strauss offers a history lesson : It was first celebrated in this country in the 1880s — at a time when people commonly worked 12-hour days. The first Labor Day rally, in 1882, was in support of an eight-hour workday.

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Video: Sukkhasantikul Says BAA Dispute Could Be ‘Disastrous’

August 16, 2010

Aug. 16 (Bloomberg) — Max Sukkhasantikul, a commercial aviation analyst at Frost & Sullivan Ltd., talks about the possible strike action by BAA Airports Ltd. workers over pay that could result in the closure of London’s airports. He speaks with Andrea Catherwood on Bloomberg Television’s “The Pulse.”

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Andrew Reinbach: Time for Another WPA

July 5, 2010

There’s no sense beating around the bush: We need another WPA. And it’ll probably have to be more or less permanent. I can already hear the Republican leadership beating the drums. After all, if they’d rather court a double-dip recession than extend unemployment benefits , they’ll never let a massive federal jobs bill get past them without a fight. Even if it is a matter of life and death for millions of unemployed Americans. A new WPA is against everything Republicans say they stand for. But that’s just another example of how they put party before country. So I say, let them do it. If Republicans want to make the November election a national referendum on the Democratic Party, I say make every Republican look hopelessly out of touch. Force them to insist there are plenty of jobs for everybody, while keeping one foot on the necks of unemployed, dispossessed, middle-class Americans. Because the truth is, there aren’t enough jobs for everybody now, there won’t be enough jobs for everybody in the future, and we’re going to have to get used to it. There are just more people than jobs in this country–about the same number of jobs now as there were in 1999, but with 28 million more of us . It’s called structural unemployment. And it’s not going away. The Commerce Department, for instance, says the economy has to grow by 3 percent a year just to keep up with population growth, but grew only 2.7 percent in the first quarter . To lower the jobless rate by one percentage point, the economy has to grow 5 percent for a full year . That’s just not reassuring; in case you hadn’t noticed, the economy’s slowing, and barely creating any jobs . But so what? Even when the economy looked to be improving, the Fed said it would take more than two years of recovery to cut unemployment by only 2.5% . Meanwhile, most economists say we won’t be anywhere near healthy employment until at least 2014. America just can’t wait that long, whether it’s a matter of fairness, making money, or dodging blood in the streets. This is especially true because we’re living in an age when almost no job can’t be eliminated by a computer. If, for instance, a guy sitting in a Houston cubicle can bomb targets in Afghanistan with a drone, how long will it be before the same guy is flying 747s from the same cubicle? It probably wouldn’t appeal to passengers. But shareholders would love it. And the same applies for almost every other job. After all, we’re on the lip of what’s called The Singularity — an era in which ordinary people will be competing with half-human, computer-enhanced, virtually immortal cyborgs . Whether going down that road is a good idea is a conversation worth having: But anybody who thinks the idea’s a prescription for full employment is just not in touch with reality. So the question for the country is: How do we deal with an America that just won’t have enough jobs to go around–when not having a job is at least as likely as having one, many citizens will be left in the cold, and we’re busily building an enormous underclass ? Recognizing this reality isn’t so much an ideological thing as it is a conceptual one. After all, part of the idea of America is that we’re a country where anyone willing to work can find a job. But that’s a holdover from the Industrial Age, when most jobs were unskilled. We have to come to grips with the fact that in the world that is, some people are frozen out of the job market now, won’t be returning to it later, and can’t be left at the curb. Meanwhile, we face serious structural problems that the private sector has displayed no interest in solving — but that we have to solve, if we want to stay in the global game. When you land in an airport in Europe or Japan and head for town, you’re driving on a first-class road. The bridges and tunnels are solid. Traveling by rail is a pleasure. The infrastructure, in other words, is in good condition, and as a result, the national machine works pretty well. You can’t say that about this country, which has been starving its governments of funds for years. And the result can be seen on every road, airport, and port facility from sea to shining sea. As anybody in Minneapolis can tell you , bridges are beginning to collapse on us. Most of our airports are more or less obsolete. And the state of many of our public buildings is a disgrace. This, in what’s supposed to be the greatest nation on earth. But the worst thing about it is that it makes the national machine inefficient, so it’s harder for us to compete in the global economy. In other words, it costs private sector jobs. We have to fix that. And as it happens, the last time we put any serious effort into repairing or building the infrastructure was when FDR begat the WPA (Works Progress Administration), which gave Americans work and dignity when the private sector simply couldn’t . The best news for today: The WPA didn’t just give people jobs and — not incidentally — transform an army of unemployed Americans with nothing to lose into citizens with a place in the mainstream. It was cheap That’s right. Before the right wing noise machine cranks up another set of lies about how expensive another WPA will be, listen to this: Between 1935 and 1941, the WPA provided almost eight million jobs at a cost of $11.4 billion . Adjusted for inflation, that’s about $144 billion today–$20.57 billion a year for seven years, $14.4 billion for ten. By comparison, the 2010 Defense budget is $663.8 billion . Okay — you knew that was coming. But aside from jobs and useful projects, that money has a multiplier effect that means a major stimulus to the economy. It keeps people in their homes, buying stuff and creating other jobs. It will help the economy when it needs help. And a permanent WPA — or whatever it would be called — would do that year in, year out. Is it socialism? Self-interest is more like it. From a purely political perspective, and without raising all those messy questions about ethics and morality, it would defuse the explosive danger of having millions of people running around the country, permanently unemployed and with nothing to lose. That’s worth something. America is passing through a serious crisis, a crisis as much of faith in the American idea, as it is a simple economic one. That idea survived the Depression, when — until FDR was elected — unemployment was 25 percent and people were on their own. The idea of America can survive this one, too. But to do that, we have to reject the idea that we don’t owe each other anything; that’s a crude and immature way of looking at the world. We’re individuals, responsible for our own lives, sure; but we’re also members of a community. So when we walk away from each other, we walk away from ourselves. If anything pulled us out of the Depression, it was that idea that we’re all in this together. That may have been an illusion. Maybe filmmaker John Cassavetes was right when he said, “Maybe there never was an America in the thirties; maybe it was all Frank Capra.” But I’ll take it; there are worse things in life than Frank Capra’s America.

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Ash Zones Breed Confusion as Paris Airports Open, Heathrow Remains Closed

April 20, 2010

By Steve Rothwell and Alex Morales April 20 (Bloomberg) — Europe’s air-traffic controllers can’t agree on whether it’s safe to fly through the Icelandic ash cloud as airports in Paris, Frankfurt and Amsterdam reopen while London’s Heathrow hub remains closed. Services from Paris’s Charles de Gaulle and Orly terminals resumed this morning, with 30 percent of flights likely to operate, according to French Transport Minister Dominique Bussereau . Heathrow, Europe’s busiest airport, probably won’t reopen today, Britain’s National Air Traffic Services said. “They are using a different model in Paris and other parts of Europe and we are speaking to the authorities about this,” said Richard Goodfellow , a spokesman for British Airways Plc , which uses Heathrow as its main hub. The carrier said NATS was to blame for six days of disruption to its services. About 14,000 flights should take place in Europe today, or 50 percent of the usual total, as flight bans imposed after the eruption of Iceland’s Eyjafjallajökull volcano are eased, according to Brussels -based Eurocontrol, which oversees flight paths in the region. Airspace is still restricted in 10 countries, based on decisions by local traffic control bodies. Ash represents a threat to jetliners because it could stop their engines by melting and congealing in turbines. European Union transport ministers agreed yesterday to loosen limits on flying after airline losses reached as much as $300 million a day, according the International Air Transport Association . Under the EU accord, the U.K. Met Office’s Volcanic Ash Advisory Centre is supplying maps showing areas where ash concentrations are more than 10 times normal levels and flights are banned, together with ones where the dust is thinner. Local controllers must decide whether to permit flying in those zones. ‘Safest Thing’ “They have to make a decision about the safest thing to do,” Eurocontrol spokeswoman Kyla Evans said in an interview. “Using the more detailed information available, some have decided to open a little bit, some are waiting a bit longer and some have said that flying will open up completely.” As of midday, the ash plume covered a swath of Europe from Ireland to Russia, including northern France and Italy and the whole of Germany, Denmark, the Benelux nations, Switzerland, Austria, Poland, the Czech Republic, Latvia and Lithuania, according to the Met Office. Most of Scandinavia and Scotland are ash free, as is the Iberian peninsula. BA Thwarted British Airways, the largest carrier between London and New York, said after yesterday’s EU meeting that it would resume flights from the U.K. capital at 7 p.m. today. It later scrapped short-haul services throughout the country after NATS warned of a new ash cloud, together with all long-haul departures. The company, losing 20 million pounds ($30 million) a day in revenue , still wants to operate more than a dozen inter- continental routes into Heathrow and with aircraft already in the air is monitoring airport availability, Goodfellow said. Among Air France arrivals at Charles de Gaulle this morning were services from Los Angeles and New York, while planes departed for Beirut, Algiers and Cairo. Flights to European destinations were schedule to resume at noon. France’s civil-aviation authority, the DGAC, opened Paris- area airports after Air France completed test flights from the capital to Bordeaux, Toulouse, Marseille and Nice without incident, spokesman Eric Heraud said by telephone. Paris and London are both under the same ash cloud as modeled by the Met Office and a British Airways plane also flew a three-hour test flight from the U.K. capital without incident. Faced with similar data, “it’s for each authority to reach the interpretation it considers most appropriate,” Heraud said. Lufthansa Flights Deutsche Lufthansa AG intends to operate 200 flights today under visual flight rules after receiving special clearance from German air-traffic regulator Deutsche Flugsicherung, spokeswoman Claudia Lange said in a telephone interview today. The carrier will operate the majority of long-haul services to destinations including New York, Boston and Miami, as well as some flights within Europe and Germany, she said. German airspace is officially closed for normal flight rules until 8 p.m. local time, DFS said in a statement on its Web site. With planes out of position and airlines concentrating on repatriating stranded passengers, the restoration of full timetables may take six days, according to IATA. Flight bans imposed after the April 14 eruption in Iceland grounded 95,000 services through today, Eurocontrol said in a statement. Restrictions remain in Denmark, Estonia, Finland, Latvia, Slovenia, Slovakia, Ukraine and parts of France and Italy. Airspace above 20,000 feet (6,100 meters) is also open. Not Normal “It’s a long way short of any semblance of normal operations,” said John Strickland , an analyst at JLS Consulting Ltd. in London. In the U.K., skies over Glasgow, Edinburgh and Aberdeen were reopened to limited services at 7 a.m., though they may close later today, according to BAA Ltd., which owns the airports in the Scottish cities. European airlines have asked governments and the European Union for aid, British Airways Chief Executive Officer Willie Walsh said yesterday, adding that money was paid after the Sept. 11 terror attacks on the U.S. “and clearly the impact of the current situation is more considerable.” European Union Competition Commissioner Joaquin Almunia said restrictions on aid may be eased as the impact of the disruption is discussed by ministers. U.K. Prime Minister Gordon Brown said today that “every aspect of contingency planning is being looked at” in order to restore flights and repatriate stranded Britons. ‘Safe Corridors’ “We know that further volcanic ash will be in the clouds over the next day or two, so we are taking advantage of the window of opportunity,” Brown told reporters in London. “We are having discussions with the manufacturers, airline authorities, safety representatives and the Met Office about what would be safe corridors that we might be able to use.” The Eyjafjallajökull eruption began on March 20 with a lava flow on the eastern flank of the volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14, directly under the glacier that covers most of the mountain. The previous eruption of the 1,666-meter peak in December 1821 continued until January 1823. Asian carriers including Singapore Airlines Ltd., Cathay Pacific Airways Ltd. and Air China Ltd. have added extra flights or larger planes on services to Rome and other open airports to help stranded passengers. U.S. Services Delta Air Lines Inc. , the world’s largest carrier, aimed to have overnight flights to Madrid, Barcelona, Rome, Athens and Istanbul, spokesman Anthony Black said. The company canceled 90 services yesterday and 39 for today until European airspace controllers provide further updates, he said. UAL Corp.’s United Airlines intends to operate all of its flights from the U.S. to Europe later today and have a “full recovery” with normal schedules by tomorrow, said Robin Urbanski , a spokeswoman for the Chicago-based carrier. AMR Corp. ’s American Airlines canceled 62 European flights today because of ash from a new eruption, spokesman Tim Wagner said in an e-mail. The airline will operate flights between the U.S. and Madrid, Barcelona and Rome, he said. To contact the reporters on this story: Steve Rothwell in London at srothwell@bloomberg.net ; Alex Morales in London at amorales2@bloomberg.net .

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Air France, Lufthansa Push to Start Flights as Losses From Ash Cloud Mount

April 18, 2010

By Gregory Viscusi and Brian Parkin April 19 (Bloomberg) — Deutsche Lufthansa AG , Air France- KLM Group and industry groups are pressing European governments to re-examine an unprecedented closing of the region’s airspace from last week’s Icelandic volcanic eruption as losses from the grounding of aircraft pile up. Lufthansa and Air France’s KLM unit reported successful testing of flights without passengers during the weekend, and Air France said an inspection of an Airbus A320 flown yesterday from Paris to Toulouse showed “no anomalies.” The Association of European Airlines , which represents 36 carriers, said it wants an “immediate” assessment of the airspace restrictions. “We’re appealing to the government day and night to get an easing of the ban, but frankly there’s not much more we can do but keep knocking on the door,” Andreas Bartels , a spokesman for Cologne, Germany-based Lufthansa, said in a telephone interview. “We’re an airline and we want to fly.” As many as 63,000 flights have been canceled after the April 14 eruption at the Eyjafjallajökull volcano spewed dust across Europe’s airspace, causing airports from Dublin to Moscow to shutter. Spain, holder of the European Union presidency, called a video conference among transport ministers today to discuss emergency plans. The disruptions are costing carriers $200 million a day, according to an estimate by the International Air Transport Association . British Airways Plc, with daily revenue of about 24 million pounds ($37 million), has canceled all flights to and from London through tomorrow. Chief Executive Officer Willie Walsh was on a test flight yesterday from Heathrow to Cardiff that encountered “no difficulties,” the carrier said. Stock Slump Airline stocks , including British Airways, Lufthansa, and Ryanair Holdings Plc, slumped on April 16, with the Bloomberg EMEA Airlines Index falling 3.1 percent, the steepest decline in 2 1/2 months. Volcanic ash can cause jet engines to fail by melting and then congealing in the turbines. While Brussels -based Eurocontrol, which oversees Europe’s flight paths, predicts as much as half of Europe’s airspace may be “risk free” today, U.K. Transport Minister Andrew Adonis said in televised comments yesterday that flights across northern Europe won’t be safe in the next 24 hours, citing advice given by the country’s Met Office. KLM operated 10 test flights with only a crew over the weekend and concluded that the quality of the atmosphere is “in order.” Air France said its engineers found no visual impact during a flight from Paris to Toulouse and no problems with the jet afterwards. Lufthansa sent 10 aircraft from Munich to Frankfurt to reposition its fleet on April 17. ‘Worse Than 9/11’ “With 313 airports paralyzed at the moment, the impact is already worst than 9/11,” Olivier Jankovec , Director General at Airports Council International, said in a statement. “While safety remains a non-negotiable priority, it is not incompatible with our legitimate request to reconsider the present restrictions.” The disruption to European air traffic caused by the cloud of volcanic ash is “unsustainable,” Transport Commissioner Siim Kallas told a briefing in Brussels yesterday. The Commission will set up a group to assess the impact of the ash cloud on the economy and European travel. A Eurocontrol spokesman didn’t answer calls for comment. German Transport Minister Peter Ramsauer expects restrictions over the country’s airspace to be maintained for “the coming days,” he told the Bild newspaper in an interview published today. French Environment Minister Jean-Louis Borloo , speaking to reporters yesterday, said he doesn’t expect a complete reopening of the European airspace “from one day to the next.” France, Germany France’s airspace in the north and east, which includes the airports of Paris and Lyon, will remain closed until at least the morning of April 20. Civil aviation authorities reopened the airspace over the southwest, allowing Air France to fly seven long-haul flights from Toulouse today. Germany’s DFS flight safety authority shut all of the country’s airports by 10 p.m. yesterday after easing a ban earlier on hubs including Berlin and Frankfurt. Airspace closure will remain until at least 2 p.m. U.K. airspace remains restricted until at least 7 p.m., flight-control authority National Air Traffic Services said. The Netherlands extended the closure of its airspace until 8 p.m. Norway re-opened some airspace north of Bergen airport until Berlevag, and the south may be cleared later. Sweden re- opened the area north of Soderhamn, including Kiruna airport. Airspace in northern Spain was shut. Asia, U.S. “We hope to receive permission as soon as possible after that to start up our operations and to transport our passengers to their destinations,” KLM Chief Executive Officer Peter Hartman said in a statement. Airlines in the Asia-Pacific region canceled most Europe- bound flights, with Qantas Airways Ltd. saying it won’t fly to European destinations before April 20. Carriers including Air China Ltd., Japan Airlines Corp., Thai Airways International Pcl, Korean Air Lines Co. and Cathay Pacific Airways Ltd. also shut down services to Europe. United Parcel Service Inc. , the world’s largest package- delivery firm, began trucking items from Asia through Istanbul and into Europe. The company made a flight from Dubai to Istanbul yesterday, then put those goods on trucks bound for Europe, according to spokesman Norman Black . UPS’s air hub in Cologne, Germany has been closed since April 16. Little Visibility Haraldur Eiriksson, a meteorologist at the Icelandic meteorological office , predicts little change in the ash pattern in Europe at least through April 23. “This could have an ongoing impact on European air travel,” he said. “The forecast hasn’t changed, although the height the volcano is spewing the ash into has decreased from 5 to 6 kilometers to less than 3 kilometers and now it can’t be seen on our radars.” Volcanic eruptions may continue for months and curtail European air traffic, said Sigrun Hreinsdottir, a geophysicist at the University of Iceland in Reykjavik. “It could erupt, pause for a few weeks, and then possibly erupt again.” The last eruption of the 1,666-meter (5,466-foot) Eyjafjallajökull in December 1821 continued until January 1823. The current blast has sent ash as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before reaching the air, she said. Obama, Merkel “We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone. The volcanic ash cloud also led world leaders, including Barack Obama , German Chancellor Angela Merkel and French President Nicolas Sarkozy to cancel plans to attend yesterday’s funeral of Polish President Lech Kaczynski , killed with 95 others in an April 10 plane crash. The U.S.-based Air Transport Association said yesterday that 310 non-stop flights scheduled between the U.S. and Europe, or 92 percent of the total for the day, were canceled. Delta Air Lines Inc. , the world’s largest carrier, scrapped 97 flights yesterday to and from Europe, spokesman Anthony Black said. A further 49 flights have been grounded for today. AMR Corp. ’s American Airlines canceled 60 flights to and from Europe. The eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14, directly under the icecap that covers most of the mountain. To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net ; Brian Parkin in Berlin at bparkin@bloomberg.net .

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Volcano May Keep Europe Airports Shut Four More Days

April 18, 2010

By Matthew Brown and Omar R. Valdimarsson April 18 (Bloomberg) — Northern and central Europe may remain closed to air traffic until April 22 as winds push ash from volcanic eruptions in Iceland across the continent, forecasters said. More than 77 percent of flights that cross the European airspace were canceled yesterday as airports from Dublin to Moscow closed. No planes will operate out of the U.K. until at least 1 a.m. London time tomorrow, the National Air Traffic Service said. German airports will remain closed until 8 p.m. Berlin time, the DFS air traffic control agency said. “Expect ongoing interruptions for the next four or five days,” Teitur Atlason, at the Icelandic meteorological office , said in a telephone interview yesterday. “The eruption is still in full swing, and the volcano is spewing pretty dark ashes as high into the air as 5 to 6 kilometers.” Flights were grounded after April 14 when an eruption at the 1,666-meter (5,466-foot) Eyjafjallajökull volcano spewed dust across thousands of miles of European airspace. Canceled flights are costing carriers about $200 million a day, the International Air Transport Association estimates. “The jet stream winds, which extend from 10,000 feet up to 40,000 feet, show no signs of change through Wednesday,” AccuWeather.com Inc. said in a statement . “Any ash plume that is released from the volcano will continue to threaten northern Europe and the British isles.” Melt and Congeal Flights have been halted because of concerns that the ash plume could damage engines and speed sensors. The finest material from the blast is formed of dust akin to glass, which can melt and congeal in a turbine, causing it to stop, said Sue Loughlin , head of vulcanology at the British Geological Survey. “The current in the height the ashes are reaching remains a strong northwesterly wind, which blows the ashes to Scotland and South Scandinavia,” Atlason of the Icelandic Met Office said. “Once the ashes reach those places, other more complex wind systems take over, which spread the ashes across North and Central Europe. This will continue until Wednesday.” Airlines in the Asia-Pacific region canceled most Europe- bound flights, with Qantas Airways Ltd. saying it won’t fly to European destinations before April 20 and can’t confirm when service on those routes will resume. Asia Routes Carriers including Air China Ltd., Japan Airlines Corp., Thai Airways International Pcl, Korean Air Lines Co. and Cathay Pacific Airways Ltd. shut down service to Europe, while Singapore’s Changi Airport reported cancellation of 34 arrivals and departures, including Singapore Airlines Ltd. flights to nine European destinations. Volcanic eruptions may continue for months and curtail European air traffic, said Sigrun Hreinsdottir, a geophysicist at the University of Iceland in Reykjavik. “It could erupt, pause for a few weeks, and then possibly erupt again,” he said. The last eruption of Eyjafjallajökull in December 1821 continued until January 1823. The current blast has sent ash to as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before reaching the air, she said. “We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone. Polish Funeral The volcanic ash cloud also led world leaders, including Barack Obama , German Chancellor Angela Merkel and French President Nicolas Sarkozy to cancel plans to attend the funeral of Polish President Lech Kaczynski , killed with 95 others in an April 10 plane crash. Other delegations, including Russian President Dmitry Medvedev, are struggling to get through via government and military planes, which have clearance to fly at low altitudes. Airline stocks, including British Airways Plc, Deutsche Lufthansa AG and Ryanair Holdings Plc, fell on Friday as fleets were grounded. British Airways Plc , which halted flights from the U.K. from midday on April 15, said no service to and from London will operate today. Its shares tumbled 3.1 percent in the U.K. capital on April 16, the most since Feb 12. French civil aviation authorities said that at 2 p.m. today they will shut airports in the southwest of the country, which had been the last French airports unaffected. The authorities had closed the airports of Nice and Marseille in the south-east at 6 a.m. today. All French airports will remain closed until at least 8 a.m. tomorrow. Rome, Iceland Belarus closed airspace amid predictions the ash will linger for as many as three days, Interfax reported. Italy will keep airspace in the north of the country closed until at least 8 a.m. tomorrow and may curtail flights in the south, ENAC, the nation’s civil aviation authority, said in an e-mailed statement yesterday. Japan Airlines canceled its flight to Rome today due to closure of the city’s Fiumicino Airport, according to the carrier’s Web site . Because of the wind direction, Iceland’s Keflavik airport is open, and North American flights are running on schedule. The U.S.-based Air Transport Association said yesterday that 282 of 337, or 84 percent, of the day’s nonstop flights between the U.S. and Europe were scrubbed. Delta Air Lines Inc. , the world’s largest carrier, scrubbed 91 flights yesterday to and from Europe, said spokesman Anthony Black. AMR Corp. ’s American Airlines canceled 56 flights between the U.S. and Europe, the company said in a recorded message. American was able to operate flights into and out of Spain and Italy, spokesman Tim Smith said. March 20 Eruption Karen Pride , a spokeswoman for Chicago’s Department of Aviation, which operates O’Hare International Airport, Midway International Airport and Gary-Chicago International Airport, said 22 flights bound for Chicago from Europe were canceled. The eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14, directly under the icecap that covers most of the mountain. “The problem here is we have magma interacting with glacier ice, and that leads to explosions,” Hreinsdottir said. “That causes the material to go much higher in the air.” Mike Burton, a researcher at the Italian National Vulcanology Institute who has studied the ash from the latest explosion, said it presents more of a threat to aircraft than would the dust from a typical eruption. “It’s likely that ash production will continue long after all the ice is melted in the volcano as this kind of magma can produce ash without water,” Burton said. “Fine ash is easier to transport long distances and goes higher into the atmosphere. This is not good news for flights.” To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net ; Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net

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Warsaw Honors Kaczynski as Ash Cloud Threatens Leaders’ Travel to Funeral

April 17, 2010

By David McQuaid and Marta Waldoch April 17 (Bloomberg) — Thousands of Poles gathered in Warsaw to honor President Lech Kaczynski and 95 others killed in an April 10 plane crash. World leaders trying to fly in for his funeral tomorrow in Krakow, where Polish kings were buried, are being hampered by a cloud of volcanic ash over Europe. Sirens wailed at 8:56 a.m. in Poland’s capital, marking the moment Kaczynski’s plane crashed in Smolensk, Russia, where he was to attend a ceremony honoring more than 22,000 Polish officers and officials killed by Stalin’s secret police. At noon, Prime Minister Donald Tusk , whose ruling Civic Platform party had often clashed with Kaczynski and his twin brother Jaroslaw , the leader of the largest opposition party, called for Poles to overcome their political differences. “This is a serious test for all of us,” Tusk told a crowd in Pilsudski Square that police estimated at about 100,000. “Like the passengers on that airplane, we differ by background, political views and age. Our sense of community can only be preserved within us.” All Polish airspace is closed indefinitely to passenger flights, Grzegorz Hlebowicz , a spokesman for the Polish Air Navigation Services Agency , said by phone today. Ash from Iceland’s 5,500-foot Eyjafjallajökull volcano forced closures in Russia and northern Italy and cut the chances leaders such as U.S. President Barack Obama will make it to the funeral. ‘Wait and See’ “We’ll have to wait and see how the situation develops,” Piotr Paszkowski , a spokesman for the Foreign Ministry in Warsaw, said by phone. Dignitaries from India, South Korea, Mexico, New Zealand, Egypt and Pakistan have canceled plans to attend, according to an updated list on the Ministry’s Web Site. The late president and his wife are to be buried in Krakow’s Wawel castle, the resting place of Poland’s medieval kings. Russian President Dmitry Medvedev , German Chancellor Angela Merkel and French President Nicolas Sarkozy are also scheduled to attend the funeral tomorrow. Family members want the ceremony to begin as scheduled “under any circumstances,” Jacek Sasin, a minister in the presidential administration, said yesterday when asked whether heads of state would be forced to cancel. Those still planning to attend include Sarkozy, Italian Prime Minister Silvio Berlusconi and Ukrainian President Viktor Yanukovych . German Chancellor Merkel also intends to be at tomorrow’s funeral after her return flight from the U.S. was diverted to Lisbon and Rome. She then switched to road transport north, a government spokeswoman said. Obama Detour Obama’s aides are considering a longer flight route to allow the U.S. president’s plane to detour around the ash plume, according to an e-mail from the office of White House Press Secretary Robert Gibbs . Warsaw’s downtown streets, closed to traffic, were filled with pedestrians headed for Pilsudski Square, where the memorial services were held. The crowd gathered there in the early morning included uniformed delegations of miners, war veterans, police, firefighters and scouts, all bearing banners. “I came to pray for the dead and to show their families I care,” said retired engineer Jerzy Nowicki, who traveled about 210 kilometers (130 miles) by bus from Torun in northwest Poland. Kaczynski, his wife Maria, and officials including central bank Governor Slawomir Skrzypek and the top four commanders of Poland’s armed forces were among 96 people killed in a plane crash outside Smolensk, Russia on April 10. Early Election Poland must hold an early election by the end of June to fill the empty post of president. Bronislaw Komorowski , the parliamentary speaker who has assumed Kaczynski’s duties and is the ruling party’s candidate for president, said he will set an election date on April 21. Poland’s opposition parties and a legal opinion prepared by parliamentary experts give June 20 as the preferred election date. The edge of the ash cloud was forecast to reach as far south as northern Italy and Romania and as far east as the borders of Kazakhstan today, according to the Met office, the U.K. government forecaster. There have been no landings today at Balice airport near Krakow and at the secondary airfield for guests in Pyrzowice, about 100 kilometers (60 miles) west of Krakow, representatives of the airports said. Visual Flight “We can handle takeoffs and landings, but only for airplanes using visual flight rules,” Justyna Zajaczkowska, a spokeswoman for the Balice airport, said by telephone. Poland, which has closed its air space to passenger traffic, will allow flights by government, military or private aircraft at altitudes below 6,000 meters. Still, the threat posed by volcanic ash to aircraft engines means “they won’t do it, because they might kill themselves,” David Learmount , a former U.K. Royal Air Force pilot and air-safety editor at Flight International Magazine, said by phone. European airlines canceled more than 70 percent of their flights as most of the continent’s northern and central nations remained closed to air traffic. Accuweather predicted little change until April 22. To contact the reporters on this story: David McQuaid in Warsaw dmcquaid1@bloomberg.net ; Marta Waldoch in Warsaw at mwaldoch@bloomberg.net

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Volcano Forces Cancellation of 70% of Europe Flights; May Last to Thursday

April 17, 2010

By Matthew Brown and Omar R. Valdimarsson April 17 (Bloomberg) — European airlines canceled more than 70 percent of their flights today as most of the continent’s northern and central nations remained closed to air traffic, and Accuweather predicted little change until April 22. No flights will operate out of the U.K. until at least 1 a.m. London time tomorrow, the National Air Traffic Service said today via e-mail. The European Organisation for the Safety of Air Navigation, or Eurocontrol , expects about 6,000 flights across Europe today, compared with 22,000 on a “normal” Saturday, it said today in a statement. “Expect ongoing interruptions for the next four or five days,” Teitur Atlason, at the Icelandic meteorological office , said in a telephone interview today. “The eruption is still in full swing, and the volcano is spewing pretty dark ashes as high into the air as 5 to 6 kilometers.” More than 20,000 flights have been grounded after an April 14 eruption of the 1,666-meter (5,466-foot) Eyjafjallajökull volcano sent dust billowing across thousands of miles of European airspace and closed terminals from Dublin to Moscow. “The jet stream winds, which extend from 10,000 feet up to 40,000 feet, show no signs of change through Wednesday,” Accuweather said in a statement. “Any ash plume that is released from the Eyjafjall volcano in Iceland will continue to threaten northern Europe and the British isles.” Canceled flights are costing carriers about $200 million a day, the International Air Transport Association estimates. Anyone hoping to travel should contact their airline before traveling to the airport, NATS said. Fine Material Flights have been halted because of concerns that the ash plume could damage engines and speed sensors. The finest material from the blast is formed of dust akin to glass, which can melt and congeal in a turbine, causing it to stop, said Sue Loughlin , head of vulcanology at the British Geological Survey. “The current in the height the ashes are reaching remains a strong northwesterly wind, which blows the ashes to Scotland and South Scandinavia,” Atlason of the Icelandic Met Office said. “Once the ashes reach those places other more complex wind systems take over, which spread the ashes across North and Central Europe. This will continue until Wednesday.” Volcanic eruptions may continue for months, disrupting European air traffic when ash is blown above the continent’s busiest airports, Sigrun Hreinsdottir, a geophysicist at the University of Iceland, said in a telephone interview from Reykjavik. “From what we’ve seen, it could erupt, pause for a few weeks, and then possibly erupt again.” Last Eruption The last eruption of Eyjafjallajökull in December 1821 continued until January 1823. The current blast has sent ash to as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before erupting, she said. “We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone. “This is the first time all our planes are grounded,” Lufthansa spokesman Wolfgang Weber said via telephone. British Airways Plc , which halted flights from the U.K. from midday on April 15, said at midday today that no services to and from London will operate today or tomorrow. Its shares tumbled 3.1 percent in the U.K. capital yesterday, the most since Feb 12. Canceled Flights Ryanair Holdings Plc , the region’s largest discount carrier, canceled all flights to and from the U.K., Ireland, Scandinavia, Belgium, the Netherlands, northern France and Germany until 1 p.m. on April 19. The stock fell 2.5 percent in Dublin, the steepest drop since Feb. 5. Deutsche Lufthansa AG canceled all flights to and from German airports until 8 p.m. CET tonight, it said in a statement on its Web site. Air Berlin Plc canceled all flights except some connections in Spain until 2 a.m. CET tomorrow. Passenger were asked not to travel to the airports. Denmark extended the shutdown of its airspace for all flights until 2 a.m. local time tomorrow, according to the Web site of Copenhagen-based Naviair, Denmark’s flight controller. Switzerland and Belgium today extended closure of their respective airspaces to 8 p.m. local time, Agence France-Presse reported. Paris airports will remain shut until 8 a.m. on Monday, a government official said. Belarus closed airspace for passenger and cargo flights, Interfax reported. The ash may stay over the country for two or three days, it said. Amsterdam Airspace Air France-KLM Group’s Dutch KLM unit canceled today’s flights into and out of Amsterdam Airport Schiphol, the company said in a statement on its Web site. The Dutch airspace be closed its airspace until further notice, Amsterdam Airport Schiphol said on its Web site, citing a decision by the Netherlands’ Inspectorate for Transport, Public Works and Water Management. The airport said it wasn’t clear when traffic might resume. Carriers throughout the Asia-Pacific region canceled flights on the routes to Europe, with Australia’s Qantas Airways Ltd. saying it didn’t know when service might resume. Cathay Pacific Airways Ltd. , based in Hong Kong, scrapped departures to London, Paris, Frankfurt and Milan and said it wouldn’t accept new bookings for the next few days. Europe-bound flights from Japan, South Korea, China and India were stopped because of danger from the ash, with Air India and Singapore Airlines Ltd. also canceling some routes to North America. ‘Several Days’ “At this stage it’s highly unlikely things are going to return to normal for several days at least,” David Epstein , a Qantas spokesman in Melbourne, said today at a press briefing. “It may well be a week.” Prevailing winds may provide some respite for travelers. Air streams over Britain come from the west or southwest 70 percent of the time and would carry ash away from the major hubs such as Heathrow and Amsterdam Schiphol, said Barry Grommett , a meteorologist at the U.K. Met Office , the government forecaster. “We normally look to the Atlantic for our weather, so that’s going to move anything emitting from a volcano in Iceland away from us,” he said by telephone. “The predominant pattern would take the plume north-eastward from the eruption site.” Blocking Pattern The outlook this weekend is for westerly winds to pick up over northern Britain, shifting ash away from Scotland, while a blocking pattern may continue to keep it over England. The edge of the ash cloud was forecast to reach as far south as northern Italy and Romania and as far east as the borders of Kazakhstan as of 6 a.m. today London time, according to the Met office. Because of the wind direction Iceland’s Keflavik remains open, with North American flights operating on schedule. Hubs serving 2 million people and 48 percent of Europe’s air traffic have been affected by the disruption, the Airports Council International industry group said yesterday in a statement. The situation was changing “every few hours,” it said. “This is a new situation for us,” Joe Sultana , director of airspace, network planning and navigation at Eurocontrol, which oversees the region’s flight paths, told reporters in Brussels yesterday. “We understand the economic impact to both the airlines and the European economy, but safety comes first.” The Icelandic eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it erupted again early on April 14, directly under the icecap that covers most of the mountain. Magma and Ice “The problem here is we have magma interacting with glacier ice and that leads to explosions,” Hreinsdottir said. “That causes the material to go much higher in the air.” Mike Burton, a researcher at the Italian National Vulcanology Institute who has studied the ash from the latest explosion, said it presents more of a threat to aircraft than would the dust from a typical eruption. “It’s likely that ash production will continue long after all the ice is melted in the volcano as this kind of magma can produce ash without water,” Burton said by telephone. “Fine ash is easier to transport long distances and goes higher into the atmosphere, so this is not good news for flights.” To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net ; Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net

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Icelandic Eruptions May Disrupt Air Travel for Months

April 17, 2010

By Alex Morales and Steve Rothwell April 17 (Bloomberg) — Volcanic eruptions in Iceland which this week caused thousands of flights to be canceled may continue for months, disrupting European air traffic as ash is sporadically blown above the continent’s busiest airports. More than 20,000 flights have been grounded after an April 14 eruption of the 1,666-meter (5,466-foot) Eyjafjallajökull volcano sent dust billowing across thousands of miles of European airspace and closed terminals from Dublin to Moscow. “It could go on for months,” Sigrun Hreinsdottir, a geophysicist at the University of Iceland, said in a telephone interview from Reykjavik. “From what we’ve seen, it could erupt, pause for a few weeks, and then possibly erupt again.” Canceled flights are costing carriers about $200 million a day, the International Air Transport Association estimates. Restrictions over most of the U.K. will remain in place until 7 p.m. at least, shutting London Heathrow, Europe’s busiest airport, flight-control authority National Air Traffic Services said today. “Following the latest information from the Met Office, NATS advises that restrictions across U.K. controlled airspace have been extended until at least 19:00 today and that restrictions to Scottish and Manchester airspace have been re-applied until the same time,” NATS said in a statement on its Web site. “Current forecasts show that the situation is worsening throughout Saturday.” Fine Material Carriers throughout the Asia-Pacific region canceled flights on the routes to Europe, with Australia’s Qantas Airways Ltd. saying it didn’t know when service might resume. Cathay Pacific Airways Ltd., based in Hong Kong, canceled departures to London, Paris, Frankfurt and Milan and said it wouldn’t accept new bookings for the next few days. Europe-bound flights from Japan, South Korea, China and India were stopped because of danger from the ash, with Air India and Singapore Airlines Ltd. also canceling some routes to North America. “At this stage it’s highly unlikely things are going to return to normal for several days at least,” David Epstein , a Qantas spokesman in Melbourne, said today at a press briefing. “It may well be a week.” Flights have been halted amid concern that the ash plume could damage engines or parts such as speed sensors. The finest material from the blast is formed of dust akin to glass, which can melt and congeal in a turbine, causing it to stop, said Sue Loughlin , head of vulcanology at the British Geological Survey. Current Blast Eyjafjallajökull last erupted in December 1821, with the event lasting until January 1823. The current blast has sent ash to as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before erupting, she said. “We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone. Prevailing winds may provide some respite for travelers. Air streams over Britain come from the west or southwest 70 percent of the time and would carry ash away from the major hubs such as Heathrow and Amsterdam Schiphol, said Barry Grommett , a meteorologist at the U.K. Met Office , the government forecaster. Westerly Winds “We normally look to the Atlantic for our weather, so that’s going to move anything emitting from a volcano in Iceland away from us,” he said by telephone. “The predominant pattern would take the plume north-eastward from the eruption site.” The outlook this weekend is for westerly winds to pick up over northern Britain, shifting ash away from Scotland, while a blocking pattern may continue to keep it over England. The edge of the ash cloud was forecast to reach as far south as northern Italy and Romania and as far east as the borders of Kazakhstan as of 6 a.m. today London time, according to the Met office. Because of the wind direction Iceland’s Keflavik remains open, with North American flights operating on schedule. Hubs serving 2 million people and 48 percent of Europe’s air traffic have been affected by the disruption, the Airports Council International industry group said yesterday in a statement. The situation was changing “every few hours,” it said. British Airways Plc , which halted flights from the U.K. from midday on April 15, said last night that no services to and from London will operate today. Its shares tumbled 3.1 percent in the U.K. capital yesterday, the most since Feb 12. ‘New Situation’ Ryanair Holdings Plc , the region’s largest discount carrier, canceled all flights to and from the U.K., Ireland, Scandinavia, Belgium, the Netherlands, northern France and Germany until 1 p.m. on April 19. The stock fell 2.5 percent in Dublin, the steepest drop since Feb. 5. “This is a new situation for us,” Joe Sultana , director of airspace, network planning and navigation at Eurocontrol, which oversees the region’s flight paths, told reporters in Brussels yesterday. “We understand the economic impact to both the airlines and the European economy, but safety comes first.” Air France-KLM Group , the region’s biggest carrier, canceled all services from both Roissy-Charles de Gaulle and Orly airports near Paris until 8 a.m. today and asked passengers not to travel to the terminals. Deutsche Lufthansa AG scrapped all flights scheduled to take off or land in Germany before midday, said spokesman Jan Baerwalde by telephone. Switzerland and Belgium today extended closure of their respective airspaces to 8 p.m. local time, Agence France-Presse reported. Lava Flow The Icelandic eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it erupted again early on April 14, directly under the icecap that covers most of the mountain. “The problem here is we have magma interacting with glacier ice and that leads to explosions,” Hreinsdottir said. “That causes the material to go much higher in the air.” Mike Burton, a researcher at the Italian National Vulcanology Institute who has studied the ash from the latest explosion, said it presents more of a threat to aircraft than would the dust from a typical eruption. “It’s likely that ash production will continue long after all the ice is melted in the volcano as this kind of magma can produce ash without water,” Burton said by telephone. “Fine ash is easier to transport long distances and goes higher into the atmosphere, so this is not good news for flights.” To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net ; Steve Rothwell in London at srothwell@bloomberg.net

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Airports in U.K., Northern Europe Shut as Volcanic Ash Sweeps From Iceland

April 15, 2010

By Ola Kinnander and Chris Cooper April 15 (Bloomberg) — European air traffic from Scotland to Scandinavia and the Netherlands was disrupted by volcanic ash spreading from Iceland, shutting airports and prompting British Airways Plc to suspend all domestic flights. Aberdeen, Edinburgh and Glasgow airports are already closed on advice from U.K. air traffic control, and all London airports will likely shut from midday, airport operator BAA Ltd. said today. Oslo will close its Gardamon airport outside the Norwegian capital from 10 a.m. local time, and Amsterdam’s Schiphol airport canceled dozens of flights. “Volcanic ash represents a significant safety threat to aircraft,” Taylor Samuelson, a spokeswoman for the U.K. National Air Traffic Services, said in a statement. The number of flights allowed to enter U.K. airspace had been limited because of the cloud of ash, she said. The volcanic eruption in Iceland is the second in four weeks and prompted the evacuation of the nearby area by more than 800 people as water levels in rivers rose by almost three feet. Iceland straddles mid-Atlantic tectonic plates, making the island of about 300,000 residents geologically active. Volcanic ash can disrupt flights because of the potential risk of engine malfunction and impairment of cabin air quality. Flight Delays Ryanair Holdings Plc and EasyJet Plc , Europe’s two biggest discount airlines, both warned of likely disruption because of the ash, while All Nippon Airways Co. , Asia’s largest listed carrier by sales, delayed services to London, Paris and Frankfurt. Continental Airlines Inc. may reroute some flights to the U.S. from Europe, according to a statement on its Web site. British Airways, Europe’s third-largest carrier, said it heeded advice from the National Air Traffic Services by canceling all domestic flights, according to spokeswoman Victoria Martin. All Nippon delayed Europe services by an hour to draw up new flight plans, spokeswoman Megumi Tezuka said. Deutsche Lufthansa AG has delayed and canceled some flights, with routes to and from the U.K. affected the most, Thomas Jachnow , a spokesman for the German carrier, said. Emirates, the largest Arab airline , said it had cancelled 10 flights into Heathrow, Gatwick, Manchester, Newcastle and Birmingham because of the restrictions. Passengers should check with airlines or airports on travel plans, according to BAA. Manchester, Gatwick Manchester Airport said it would suspend flights until 1 p.m. because of the cloud, spokesman Paul Hadfield said. A spokesman for Gatwick Airport, south of the capital, said 89 domestic flights had been cancelled so far today. In Norway, most flights have been cancelled. Norwegian Air Shuttle ASA, Europe’s fourth-largest low-cost carrier, has cancelled more than 100 flights today, spokeswoman Anne-Sissel Skaanvik. The National Air Traffic Service said officials would meet this morning in London to decide whether it will make a joint policy statement or recommendation. For now, it’s up to airlines to decide whether to operate flights as the volcanic ash from Iceland spreads, she said. “We shut down most of the airpace yesterday,” said Sindre Aanonsen, spokesman for Avinor, which operates 46 airports in Norway. “Now there is still space open over the eastern parts of Norway but we are strongly considering to shut down that airspace too within a few hours.” Northern Sweden In Sweden, four airports in the northern part of the country — Kiruna, Luleaa, Oestersund and Skellefteaa — closed this morning, SAS Group spokeswoman Elisabeth Manzi said. Sweden’s main airport, Arlanda in Stockholm, remains open. “More airports may be cancelled soon, and we don’t know how long this will last,” she said by telephone today. “It’s outside our control.” It is too early to gauge the economic impact of this, she said. Copenhagen Airports A/S, Scandinavia’s biggest hub, said some 20 flights, all operated by SAS, have been cancelled. The airport expects more cancellations and delays today, spokesman Soeren Hedegaard Nielsen said in a telephone interview. In Finland, all airport remain open, the country’s aviation authority Finavia Oyj said. The ash from the eruption caused some delays in flights, according to the authority. Officials may issue further guidelines after talks with the U.K. Meteorological Office and Eurocontrol, which is responsible for traffic in Europe. In the meantime it is up to individual carriers to take decisions on flights. To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net Chris Cooper in Tokyo at ccooper1@bloomberg.net

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London Airports Likely to Close as Volcanic Ash Disrupts European Flights

April 15, 2010

By Ola Kinnander and Chris Cooper April 15 (Bloomberg) — European air traffic from Scotland to Scandinavia and the Netherlands was disrupted by volcanic ash spreading from Iceland, shutting airports and prompting British Airways Plc to suspend all domestic flights. Aberdeen, Edinburgh and Glasgow airports are already closed on advice from U.K. air traffic control, and all London airports will likely shut from midday, airport operator BAA Ltd. said today. Oslo will close its Gardamon airport outside the Norwegian capital from 10 a.m. local time, and Amsterdam’s Schiphol airport canceled dozens of flights. “Volcanic ash represents a significant safety threat to aircraft,” Taylor Samuelson, a spokeswoman for the U.K. National Air Traffic Services, said in a statement. The number of flights allowed to enter U.K. airspace had been limited because of the cloud of ash, she said. The volcanic eruption in Iceland is the second in four weeks and prompted the evacuation of the nearby area by more than 800 people as water levels in rivers rose by almost three feet. Iceland straddles mid-Atlantic tectonic plates, making the island of about 300,000 residents geologically active. Volcanic ash can disrupt flights because of the potential risk of engine malfunction and impairment of cabin air quality. Flight Delays Ryanair Holdings Plc and EasyJet Plc , Europe’s two biggest discount airlines, both warned of likely disruption because of the ash, while All Nippon Airways Co. , Asia’s largest listed carrier by sales, delayed services to London, Paris and Frankfurt. Continental Airlines Inc. may reroute some flights to the U.S. from Europe, according to a statement on its Web site. British Airways, Europe’s third-largest carrier, said it heeded advice from the National Air Traffic Services by canceling all domestic flights, according to spokeswoman Victoria Martin. All Nippon delayed Europe services by an hour to draw up new flight plans, spokeswoman Megumi Tezuka said. Deutsche Lufthansa AG has delayed and canceled some flights, with routes to and from the U.K. affected the most, Thomas Jachnow , a spokesman for the German carrier, said. Emirates, the largest Arab airline, said it had cancelled 10 flights into Heathrow, Gatwick, Manchester, Newcastle and Birmingham because of the restrictions. Passengers should check with airlines or airports on travel plans, according to BAA. Manchester, Gatwick Manchester Airport said it would suspend flights until 1 p.m. because of the cloud, spokesman Paul Hadfield said. A spokesman for Gatwick Airport, south of the capital, said 89 domestic flights had been cancelled so far today. In Norway, most flights have been cancelled. Norwegian Air Shuttle ASA, Europe’s fourth-largest low-cost carrier, has cancelled more than 100 flights today, spokeswoman Anne-Sissel Skaanvik. The National Air Traffic Service said officials would meet this morning in London to decide whether it will make a joint policy statement or recommendation. For now, it’s up to airlines to decide whether to operate flights as the volcanic ash from Iceland spreads, she said. “We shut down most of the airpace yesterday,” said Sindre Aanonsen, spokesman for Avinor, which operates 46 airports in Norway. “Now there is still space open over the eastern parts of Norway but we are strongly considering to shut down that airspace too within a few hours.” Northern Sweden In Sweden, four airports in the northern part of the country — Kiruna, Luleaa, Oestersund and Skellefteaa — closed this morning, SAS Group spokeswoman Elisabeth Manzi said. Sweden’s main airport, Arlanda in Stockholm, remains open. “More airports may be cancelled soon, and we don’t know how long this will last,” she said by telephone today. “It’s outside our control.” It is too early to gauge the economic impact of this, she said. Copenhagen Airports A/S, Scandinavia’s biggest hub, said some 20 flights, all operated by SAS, have been cancelled. The airport expects more cancellations and delays today, spokesman Soeren Hedegaard Nielsen said in a telephone interview. In Finland, all airport remain open, the country’s aviation authority Finavia Oyj said. The ash from the eruption caused some delays in flights, according to the authority. Officials may issue further guidelines after talks with the U.K. Meteorological Office and Eurocontrol, which is responsible for traffic in Europe. In the meantime it is up to individual carriers to take decisions on flights. To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net Chris Cooper in Tokyo at ccooper1@bloomberg.net

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Thai Police Deployed as Courts Mull Seizing $2.3 Billion Thaksin Fortune

February 25, 2010

By Daniel Ten Kate Feb. 26 (Bloomberg) — Thai police manned checkpoints near strategic locations in Bangkok as a court prepares to rule later today whether the government can seize about $2.32 billion from fugitive Prime Minister Thaksin Shinawatra ’s family. The verdict from nine Supreme Court judges will conclude a case that began after the army ousted Thaksin in 2006, sparking a power struggle that may shape how the country is governed. Rival camps disagree on how much authority appointed soldiers, judges and royal advisers should wield over elected politicians. Police added reinforcements around the court, Parliament and Prime Minister Abhisit Vejjajiva ’s offices, the site of violent street protests from both sides in the past two years. The political turmoil has weighed on Thai stocks, which trade at 10.8 times 2010 earnings, the third-cheapest in Asia. “There are so many moving parts here that you’d have to be a very brave investor” to put money in Thailand at the moment, said Sriyan Pietersz , head of research for JPMorgan Chase & Co. in Bangkok. “Foreign investors will want to scope it out and see how the politics goes over the next couple of months.” So far this year, foreigners have been net sellers of $156 million of Thai stocks, the second-most in Asia after Taiwan, according to data compiled by Bloomberg. Thailand’s SET Index has lagged benchmarks in Indonesia, Malaysia, the Philippines and Vietnam in that time. Prosecutors are seeking to confiscate the 76.6 billion baht ($2.32 billion) that Thaksin’s children and relatives earned from the 2006 sale of holding company Shin Corp. to Temasek Holdings Pte, Singapore’s state-owned investment firm. Judges will start reading the verdict at 1:30 p.m. local time. More Protests Planned Since the coup, courts have disbanded parties linked to Thaksin that won the past two elections. The rulings have eroded confidence in the judicial system among Thaksin’s supporters, who say different standards are applied to opponents who seized the prime minister’s offices and the airports two years ago. Prosecutors have yet to bring those cases to trial. Anti-government protesters, who wear red shirts and support Thaksin, plan to rally in Bangkok starting from March 12 to push for a fresh election. Abhisit took power in December 2008 after a court dissolved the pro-Thaksin party that won a 2007 election, citing a clause in the constitution drafted after the coup. An election must be called by the end of next year. “Thaksin was very successful at reaching out to the poor in his first election,” Vikas Kawatra , head of institutional broking at Kim Eng Securities (Thailand) Pcl, the biggest brokerage by trading volume, wrote in a Feb. 24 report. “So this dispute is not likely to go away even if the red-shirts lose Thaksin because of an inability to fund supporters.” Advanced Info, Thaicom After Thaksin founded Shin Corp. in 1983, its units were awarded one of two mobile-phone concessions and an exclusive satellite franchise. The company controls Advanced Info Service Pcl , Thailand’s top mobile-phone operator, and satellite services monopoly Thaicom Pcl . Thaksin transferred his Shin stake to his children and relatives before taking office in 2001. Seven years earlier he disclosed that he was worth 60 billion baht — about $2.4 billion at the time. The Attorney-General says Thaksin concealed ownership of his stake in Shin during his five years as prime minister and used his position to increase the value of its holdings. He stands accused of changing Advanced Info’s royalty payments to the state-owned telecoms operator and approving a government loan to Myanmar, part of which was used to buy equipment from Thaicom. Thaksin denies all allegations, according to Noppadon Pattama , a former foreign minister who is part of his legal team. Thaksin plans to watch the verdict from Dubai, where he has lived most of the time since fleeing Thailand in 2008 to avoid a two-year jail sentence for corruption. Shin shares gained 121 percent from when Thaksin took office on Feb. 9, 2001, to when his family sold the company on Jan. 23, 2006, compared with a 128 percent gain in the benchmark SET index, according to data compiled by Bloomberg. Siam Cement Pcl , Thailand’s fourth-biggest company, which is controlled by the monarchy’s investment arm, gained 717 percent in that time. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net ; Shiyin Chen in Singapore at schen37@bloomberg.net

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Mid-Atlantic States Plow Roads, Runways, Rail Lines, Brace for More Snow

February 8, 2010

By Vincent Del Giudice and Dan Hart Feb. 8 (Bloomberg) — U.S. government offices were closed today as Washington, D.C., and the mid-Atlantic region attempted to dig out from a weekend blizzard and braced for another storm expected in the coming days. The storm of 2010 that was described by some forecasters as “epic” left almost 40 inches of snow in some places. The blizzard led to thousands of power outages and shut down air traffic along the mid-Atlantic seaboard. The National Weather Service said an encore storm was forming that may unleash another carpet of snow and ice during the next 48 to 72 hours. State and municipal officials told residents to think twice about traveling while cities dug out from the initial onslaught. Schools in the Washington area canceled classes for today. “People need to be very careful,” said Beverley K. Swaim- Staley , Maryland’s secretary of transportation, in an interview. “It was a very heavy snow.” As far as the next storm, she said, “We’re doing everything we can to get ready. Obviously, three feet of snow won’t melt by then.” The Virginia Railway Express, a commuter line connecting Washington to Manassas, Virginia, and Fredericksburg, Virginia, announced on its Web site it planned to suspend operations today because of power outages. ‘Amazing’ The weather service in Sterling, Virginia, issued a winter storm watch for tomorrow for a system that “had potential for 5 or more inches of snow” for the region. The weather service placed the chance of precipitation at 90 percent by tomorrow night. Over the weekend, Elkridge, Maryland, south of Baltimore, recorded 38.3 inches (97 centimeters) of snow, according to the National Weather Service. Baltimore’s airport had 24.8 inches, while Washington’s Reagan National had 17.8 inches, its second- biggest snowfall total. Philadelphia registered 28.5 inches, its second-biggest snowfall also. In Virginia, Howellsville, west of Washington, reported 37 inches of snow. “This was an epic storm,” said Andrew Ulrich , a meteorologist for AccuWeather.com Inc. in State College, Pennsylvania. “The sheer amount of snow was amazing.” Two men died assisting at the scene on an accident on Interstate 81 in Virginia on Feb. 5. Forecasters compared the blizzard to the “Knickerbocker Storm of 1922” that caused a deadly roof collapse at a Washington theater called the Knickerbocker. Ninety-eight people died in that catastrophe and 133 others were injured. Few Planes, Trains Yesterday, airports across the region struggled to dig out from the storm, and Washington Reagan, across the Potomac River from Washington, was closed for a second day. The other airports in the Washington region resumed a very limited schedule. Subway systems in Washington and Baltimore operated limited service, and utility crews worked to restore service to thousands of customers. Bus service was suspended in Washington and its suburbs, Baltimore and its suburbs, and parts of Delaware. In Pennsylvania, the Southeastern Pennsylvania Transporation Authority reported delays yesterday on its bus system due to “icy conditions,” according to the SEPTA web site. Philadelphia International Airport, meantime, reported some flight cancellations. The blizzard also caused the Senate to postpone a vote. Jim Manley , a spokesman for Senate Majority Leader Harry Reid , Democrat of Nevada, said the Senate would wait until tomorrow to consider the nomination of Craig Becker to the National Labor Relations Board. Costly The snow removal efforts strained state and local government coffers. Before the weekend, Maryland spent $50 million on snow removal this season. A storm in December cost $27 million of that and this weekend’s storm will likely cost more than that, Swaim-Staley said. The state has exhausted its reserve fund and will probably seek state assistance, she said. Virginia had already spent the $79 million it budgeted for this year for snow removal, and paid for the latest storm from a $25 million reserve fund. Karen Le Blanc, a spokeswoman for the District of Columbia said the city government was “probably over” its $6.2 million budget for snow removal. To contact the reporter on this story: Vincent Del Giudice in Washington at vdelgiudice@bloomberg.net . Dan Hart in Washington at dahart@bloomberg.net .

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Raytheon to continue assisting Airports Authority of India

January 20, 2010

Raytheon to continue assisting Airports Authority of India

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Snowstorms Blanket Northern China, Korea; Grounds Beijing, Seoul Flights

January 4, 2010

By Bloomberg News Jan. 4 (Bloomberg) — Beijing’s heaviest snowfall in almost six decades grounded hundreds of flights and forced schools to shut as temperatures were set to approach the lowest in 40 years. Beijing’s airport had canceled 254 flights today as of 11:00 a.m. local time, China Central Television reported. About 90 percent of the airport’s more than 13,000 flights yesterday were withdrawn or delayed, the state broadcaster reported. Premier Wen Jiabao yesterday called on local authorities to ensure the safety of transportation, normal supply of food and agricultural production, the official Xinhua News Agency reported. Beijing yesterday had the heaviest daily snowfall since 1951, Xinhua reported today. Among those affected by the weather were Hong Kong Financial Secretary John Tsang and Hong Kong Monetary Authority Chief Executive Norman Chan , who were forced to cancel a trip to Beijing today. Tsang and Chan will rescheduled their visit, Patrick Wong , Tsang’s press official, said by telephone. At least four airports in Shandong province were closed today due to the snow, CCTV reported. More than 15,000 people were dispatched to remove snow that had forced the closure of 30 highways in northern China, the Ministry of Transportation said on its Web site. South Korean Flights Snowstorms also grounded flights in South Korea. Gimpo airport, which operates shuttle flights to Tokyo and Shanghai, suspended all services today, according to South Korea’s Ministry of Land, Transport and Maritime Affairs. A total of 31 flights have also been delayed at Incheon airport, South Korea’s largest, the ministry said. More snow and freezing rain are expected today in the Chinese provinces of Shandong, Shaanxi, Hubei, Hunan, Jiangxi, Jilin and Heilongjiang, according to the China Meteorological Administration . Parts of Hunan and Jiangxi province may be hit by heavy snow tomorrow, the weather bureau said. Temperatures in Beijing are forecast to be as low as minus 14 degrees Celsius (6.8 degrees Fahrenheit) today and may drop to minus 16 degrees Celsius tomorrow, according to the administration. Tomorrow’s temperatures could fall to an almost 40-year low, Xinhua reported. Elementary and middle schools in Beijing and the city of Tianjin were suspended today because of the snow and low temperatures, the city governments said. Suburban portions of the Chinese capital received more than 33 centimeters (13 inches) of snow yesterday, the Beijing Daily reported. Tianjin got as much as 20 centimeters of snow yesterday, CCTV reported. Snowfall in the city of Zhangjiakou in Hebei province reached 15 centimeters yesterday, the most in a decade, the state broadcaster said. The Ministry of Agriculture dispatched seven teams to help farmers in northern China ensure agricultural production, Xinhua reported late yesterday. The teams sent to the provinces of Hebei, Liaoning, Jiangsu, Shandong and Anhui will help repair damaged greenhouses and improve the use of water and fertilizer, according to the report. — Tian Ying, Irene Shen, Jiang Jianguo, Alfred Cang, Li Yanping, Kyunghee Park. Editors: John Liu , Stan James To contact Bloomberg News staff on this story: Tian Ying in Beijing at +86-10-6649-7571 or ytian@bloomberg.net Irene Shen in Shanghai at +86-21-6104-7022 or ishen4@bloomberg.net

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New York Offering Will Lead Biggest Week for Muni Bond Sales Since April

November 16, 2009

By Jeremy R. Cooke Nov. 16 (Bloomberg) — U.S. state and local governments plan to sell the most fixed-rate bonds in almost seven months this week, including about $2.5 billion of Build America Bonds and non-subsidized taxable issues. New York’s Urban Development Corp. leads $12 billion in municipal borrowing plans, with a $1.5 billion sale of bonds backed by revenue from the state’s personal income taxes. Half of the offering will come in the form of taxable BABs, for which the U.S. government pays 35 percent of the interest expense under the Obama administration’s two-year economic stimulus. The authorization to sell Build America Bonds, which have helped raise more than $51 billion for infrastructure and bring down long-term, tax-exempt borrowing costs, at the end of 2010. The program’s success so far may merit an extension, Obama’s nominee to be assistant secretary for tax policy at the Treasury, Michael Mundaca, said earlier this month. “The future of the BAB program is the most important question facing the municipal bond market today,” John Dillon , a fixed-income strategist in Purchase, New York, for Morgan Stanley Smith Barney, the world’s largest retail brokerage, said in a Nov. 12 report. “The landscape could be permanently altered by an extension and/or expansion of the program.” If the BAB program sunsets and municipal issuers have to rely more on tax-exempt issues to fund public works again, municipal bond yields may be dragged higher along with rates on Treasuries, Dillon said. If Congress allows Build America issues to continue past the end of next year, municipals may “significantly outperform” U.S. debt, he said. 20-Year Index Falls The weekly Bond Buyer 20 index of benchmark 20-year yields has dropped 52 basis points, or hundredths of a percentage point, to 4.4 percent since the first public Build America offerings in mid-April. The New York issuer, which also does business as Empire State Development Corp., is offering $775.6 million of Build America Bonds, $501.5 million of tax-exempt debt and $224.1 million of taxable notes without federal subsidies. Individual investors can place orders today through banks led by Goldman Sachs Group Inc. Tomorrow, institutions such as mutual funds can buy the debt, rated AAA by Standard & Poor’s and AA- by Fitch Ratings. The proceeds will fund projects for state prisons, courts, public universities and police facilities; grants to local governments; and state agency equipment purchases. The deal also will help fund a computer-chip research and development center for Globalfoundries Inc., created by Advanced Micro Devices Inc. and the government of Abu Dhabi, Lisa Willner, an Empire State Development spokeswoman, said in an e-mail. Backed by Income Tax New York has twice previously sold Build America bonds backed by personal income tax revenue through the state’s Dormitory Authority. Taxable bonds set to pay 5.628 percent until March 2039 recently had a yield of 5.72 percent, according to JPMorgan Chase & Co. analysts in a Nov. 11 note to clients. That was 132 basis points more than Treasuries and 41 basis points more than comparable corporate bonds, according to the note. The last time municipal issuers sold more than $12 billion of fixed-rate bonds in one week was the one ended April 24, when a taxable California deal pushed the total to $15.4 billion, Bloomberg data show. Following are descriptions of additional pending municipal- bond sales; the timing and amounts may change. CALIFORNIA’S STATE PUBLIC WORKS BOARD intends to raise about $1.34 billion by selling federally subsidized taxable Build America Bonds and tax-exempt securities , all payable from state appropriations on Nov. 19. Banks led by Jefferies Group Inc. and Wells Fargo & Co. will underwrite the offering, the sixth of $1 billion or larger in the state since the beginning of October. The money raised will fund capital projects including work at San Quentin State Prison, veterans homes in Fresno and Redding and the J. Paul Leonard & Sutro Library at San Francisco State University. All of the bonds received ratings of BBB- from Fitch and A- from S&P. Moody’s Investors Service assigned an A1 to the $162.7 million portion of the deal for the university library, and its Baa2 to the rest. (Updated Nov. 16) LOS ANGELES INTERNATIONAL AIRPORT, the third-busiest in the U.S. last year, is planning to sell as much as $1.3 billion of bonds beginning this week through banks including Barclays Plc, Morgan Stanley and Ramirez & Co. The sales, comprising taxable Build America and tax-exempt bonds, will cover construction costs and refinance as much as $610 million of debt subject to the federal alternative minimum tax. The two-year U.S. stimulus law passed in February allows airports to replace select recent issues of AMT debt with lower-cost, tax-exempt bonds. Only airports in Atlanta and Chicago handled more passengers than the facility known as LAX last year, according to Airports Council International. (Added Nov. 16) AMERICAN MUNICIPAL POWER , a Columbus, Ohio-based supplier to public electric systems, intends to offer $600 million of bonds this week to refinance short-term notes and fund work on three hydroelectric generators on the Ohio River. Underwriters led by Bank of Montreal’s BMO Capital Markets GKST Inc. will handle the offering. It may include a mix of tax-exempt securities and taxable Build America Bonds, for which the federal government pays 35 percent of the interest cost. The bonds are secured by payments made under power sales contracts with municipal utilities in Ohio, Kentucky, Michigan, Virginia and West Virginia. (Updated Nov. 16) LOS ANGELES DEPARTMENT OF WATER & POWER, the largest U.S. municipal utility, plans to raise $500 million for its water system by selling a mix of federally subsidized, taxable Build America Bonds and tax-exempt securities. Banks led by Citigroup Inc. and Siebert Brandford Shank & Co. are to underwrite the taxable series of bonds, and De La Rosa & Co. will handle the tax-exempt portion. The bonds, backed by revenue from a system that serves about 4.1 million residents in the city of Los Angeles, received ratings of AA from Fitch and S&P and Aa3 from Moody’s. (Added Nov. 12) CHARLOTTE, NORTH CAROLINA, the state’s most populous city, plans to borrow $367 million for improvements to its water and sewer system and to pay off commercial paper. The tax-exempt revenue bonds, which underwriters led by Wells Fargo & Co.’s Wachovia Bank will market to investors this week, are rated Aa1 by Moody’s and AAA by S&P and Fitch. After the latest sale, Charlotte’s water and sewer system will have more than $1.5 billion in equivalent debt. (Added Nov. 12) To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net .

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Michael Martin: The ABC’s of Bias: Puma, Crude Oil, and You

November 7, 2009

Attention airline passengers: Not only do you have to pay extra for your luggage, your meal, and your headphones, you now have a dress code on United Airlines . But that shouldn’t surprise you. The airlines industry in general has been mismanaged for decades, including being overwhelmed with high labor costs and being laden with debt…just like the Big 3. As far as I can see, the airlines have never been a good investment. Most of the publicly traded equities are under $10 save one or two. They’re cheap for a reason: no one wants them. On Monday, ABC News ran an article on increasing energy costs and tried to tie it in with guesses of impending CFTC rules and position limits. They quoted a few sources: a family-owned heating oil company executive, the head of an airline, and a spokesman for the ATA. As a Commodity instructor and trader, I was quoted for my opinion on the reasons for the increase in prices across the board. I gave them 2 pretty good quotes, one they ran, but the most telling one was edited out: “Stable prices and cheap fuel are not our birthright,” argues the L.A. trader/instructor Martin. “This recent run up has everything to do with U.S. monetary policy and nothing to do with Wall Street speculators” was how the article was to have ended, but it was edited out. Instead, they went with a syrupy, sob story to pull on your heartstrings. The weakness of the US dollar can cause crude oil and heating oil prices to rise. Jet Fuel A, heating oil, and gasoline are derived from crude oil. Lower crude production has caused a decrease in supply, as shown in this graphic from Gregor Macdonald . View image I’m not a conspiracy theorist, but not mentioning that there could be just one other reason why heating oil is going higher, looks like ABC News has an agenda or are pandering to their readership. ABC linked an archived video from July of 2009 that features an ABC interview with an equity hedge fund manager who’s testimony was thoroughly refuted by both Jim Rogers and Nobel Economist Paul Krugman , among others, without mentioning that not everyone agreed with the testimony – especially two prominent experts. As an instructor, I’m sometimes in a position where I have to disseminate educational material for the benefit of the students, even though the material might be diametrically opposed from my own beliefs: you have to let the students (and in this case the readers) make up their own minds. With this in mind, ABC’s use of their evergreen material in an article, not an editorial, was a poor choice. Heating oil is derived from crude oil through a process known as cracking and producers make sure they have enough supply to sell to consumers for the colder fall and winter weather. As you might expect, the demand for heading oil is higher in the colder weather than warmer and this creates a seasonal tendency. The chart below is based on 26 years of data and shows that heating oil prices (aka Fuel Oil #2) bottom out in the summer and rise to peak prices in late September and October. (Chart courtesy of Jerry Toepke @ Moore Research Center Inc. ) View image I believe we’ve been spoiled with cheap fuel costs for most of our lives. America’s policy toward drilling for new oil will guarantee you skyrocketing fuel costs and alternative fuels are, although intriguing, years and years away from being practical and affordable for the majority of Americans. A larger carbon footprint is created in the formation of ethanol that the one left by actually burning ethanol. In the ABC News article, US Airways Chairman and CEO Doug Parker was quoted as saying, “we believe unchecked speculative trading of oil futures is distorting the normal market dynamics of supply and demand.” I think what Mr. Parker meant to say was, “we know we can pass higher fuel costs on to Americans if we don’t hedge, and ultimately blame speculators for the higher costs.” CEOs and their Treasurers have a fiduciary responsibility to their shareholders to hedge. David A. Castelveter, a spokesman for the Air Transport Association (ATA), said that “speculators have been causing such volatility in the market that it is hard for airlines or other oil users to make appropriate business decisions.” Really? Scott Topping over at Southwest had crude locked in at $51 / barrel when oil prices were high by utilizing several hedging techniques. Effective hedging is an ongoing process and needs to cover many years into the future, so if peak oil hits again, the hedges will already be in place. Castelveter attests that “every $1 increase in the price of oil adds about $430 million to airlines’ annual operating costs.” An effective hedging program that will offset EVERY $1 increase in the price of oil will run you but a few percentage points of the $430 million number quoted. (Note to Mssrs. Parker and Castelveter and ATA members: Read all the Nassim Taleb you can get your hands on. He may also be able to help you with some hedging techniques.) American CEOs, including those in the airline industry and ATA, are focused on one thing: hitting their quarterly earnings number…a chicken shit way to run a company. No one is taking any good risks these days: they’ve lost their balls. They don’t hedge b/c they will pass the costs onto Americans . I think they don’t hedge fuel costs because it costs money and that affects their quarterly earnings which in turn affects their share prices and the CEOs’ collective net worth. Tie airline CEO compensation to how effectively they hedge higher fuel costs I say and we might be on the right track to a higher fiduciary standard in that industry…I don’t think we are anywhere near that now. If they can ensure that we can travel for a reasonable fare while their firms remain profitable entities, pay them twice what they’re getting now . They will deserve it. Americans and everyone in the ATA need financial literacy and education, not the blame game and lazy corporate attitudes, nor further regulation. There are already some very stringent position limit rules for commodity futures traders. Any large trader will tell you it’s easy to get into a position, but hard to get out of one . As commodity expert Barry Siler said, “Being unhedged is the ultimate short position,” he says. “You’re betting every day that the price of fuel won’t go up.” I think the CEO’s of America’s airline companies are the real gamblers in the energy markets. They’re betting that world is continually stable and there will be no shocks to the global energy markets. This scenario has the potential outcome of leaving (Puma-clad) Americans stranded at the airports around key travel days while absorbing higher costs for less service.

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Qantas’s Joyce Leans on Budget Background to Cut Costs as Air Travel Sags

August 20, 2009

By Robert Fenner and Shani Raja Aug. 20 (Bloomberg) — Qantas Airways Ltd. ’s Alan Joyce , who founded the carrier’s low-cost unit before becoming chief executive officer, aims to slash A$1.5 billion ($1.2 billion) in costs at Australia’s biggest airline without hurting its brand. Joyce outlined Qantas’s most ambitious savings program since 2004 yesterday after the airline posted its first loss in six years. He said he could do it without depriving passengers of in-flight magazines, food or blankets on long-haul flights . “We don’t see an impact on what we deliver to the customer,” 43-year-old Joyce said in an interview. “In fact we are going to invest in more lounges and new aircraft types.” His challenge will be to merge the service quality of a premium airline with the efficiency of a budget carrier without denting the 89-year-old company’s image. Qantas faces rising competition for business-class passengers from Singapore Airlines Ltd. and Cathay Pacific Airways Ltd. after premium travel demand plunged 21 percent in June. “They don’t want to open themselves up to eliminating the difference between the Qantas brand and others,” said Angus Gluskie , who manages about $300 million at White Funds Management Pty. in Sydney. “They need to be smart about what they target.” Four Star Carrier Qantas shares have risen 14 percent since Joyce, the former head of its Jetstar discount carrier, succeeded Geoff Dixon in November and stepped up efforts to reduce costs. The carrier fell 1.9 percent to A$2.64 at the close of trading in Sydney. The stock has risen less than 1 percent this year, compared with an 18 percent rise in the benchmark S&P/ASX 200 index. Joyce, posting his first full-year results for the airline as CEO, yesterday said he will deliver a third of the A$1.5 billion in savings this year, cutting fuel use by reducing taxi times, flying more direct routes and using new planes such as the Airbus SAS A380. He expects to deliver the savings while expanding business- class amenities and a loyalty program to retain corporate customers, his most profitable clients. Qantas carries a four-star rating from London-based Skytrax Research , ranking alongside All Nippon Airways Co. and British Airways Plc. It trails behind five-star airlines including Cathay, Singapore Air and Qatar Airways Ltd. “It’s important for airlines to keep their brand in place, to keep the premium end of the market,” said Peter Harbison , executive chairman of the Centre for Asia Pacific Aviation, an industry consulting company. “The brand is very important at the moment.” Jetstar Joyce sees immediate savings valued at about A$100 million from renegotiating contracts with suppliers and vendors including computer-services providers. Information-technology spending, currently 3.8 percent of annual revenue for the Qantas-branded carrier, will move closer to the 1 percent Jetstar spends, Joyce said. Jetstar yesterday posted a 4.9 percent rise in earnings to A$107 million as budget-conscious passengers switched from Qantas’s full-service carrier. It was the only part of company’s flying operations to grow passengers, sales and earnings in the past year. The budget carrier today said it will add a new route on Dec. 15 from Singapore to Phuket, Thailand, and additional flights from Singapore to Manila. It also intends to fly to mainland China, it said in a statement. The Qantas unit has copied Jetstar by adopting touches such as charging passengers a fee to book an exit-row seat with extra leg-room. Joyce now also plans to introduce text-message check- in for Qantas, allowing customers to go straight to the gate, reducing the need for staff at counters. For other cost-saving measures, Joyce will need the cooperation of airports and air-traffic controllers. These include reducing the amount of time planes spend on the tarmac with their engines running and flying more direct routes using new satellite-navigation systems. “It gives a good customer outcome because it gets customers there faster and more than likely on time,” Joyce said. “By working with air-traffic control and working with the airports we can leverage technology like that.” To contact the reporter on this story: Robert Fenner in Sydney rfenner@bloomberg.net ; Shani Raja in Sydney at sraja4@bloomberg.net .

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Qantas’s Joyce Uses Budget Background to Cut Costs Without Damaging Brand

August 19, 2009

By Robert Fenner and Shani Raja Aug. 20 (Bloomberg) — Qantas Airways Ltd. ’s Alan Joyce , who founded the carrier’s low-cost unit before becoming chief executive officer, aims to slash A$1.5 billion ($1.2 billion) in costs at Australia’s biggest airline without hurting its brand. Joyce outlined Qantas’s most ambitious savings program since 2004 yesterday after the airline posted its first loss in six years. He said he could do it without depriving passengers of in-flight magazines, food or blankets on long-haul flights . “We don’t see an impact on what we deliver to the customer,” 43-year-old Joyce said in an interview. “In fact we are going to invest in more lounges and new aircraft types.” His challenge will be to merge the service quality of a premium airline with the efficiency of a budget carrier without denting the 89-year-old company’s image. Qantas faces rising competition for business-class passengers from Singapore Airlines Ltd. and Cathay Pacific Airways Ltd. after premium travel demand plunged 21 percent in June. “They don’t want to open themselves up to eliminating the difference between the Qantas brand and others,” said Angus Gluskie , who manages about $300 million at White Funds Management Pty. in Sydney. “They need to be smart about what they target.” Shares Rise Qantas shares have risen 14 percent since Joyce, the former head of its Jetstar discount carrier, succeeded Geoff Dixon in November and stepped up efforts to reduce costs. The carrier’s shares rose 9 cents, or 3.5 percent, to A$2.69 yesterday in Sydney, their highest level since Nov. 11. The stock has gained 2.3 percent this year, compared with an 18 percent rise in the benchmark S&P/ASX 200 index. Joyce, posting his first full-year results for the airline as CEO, yesterday said he will deliver a third of the A$1.5 billion in savings this year, cutting fuel use by reducing taxi times, flying more direct routes and using new planes such as the Airbus SAS A380. He expects to deliver the savings while expanding business- class amenities and a loyalty program to retain corporate customers, his most profitable clients. Qantas carries a four-star rating from London-based Skytrax Research , ranking alongside All Nippon Airways Co. and British Airways Plc. It trails behind five-star airlines including Cathay, Singapore Air and Qatar Airways Ltd. “It’s important for airlines to keep their brand in place, to keep the premium end of the market,” said Peter Harbison , executive chairman of the Centre for Asia Pacific Aviation, an industry consulting company. “The brand is very important at the moment.” Immediate Savings Joyce sees immediate savings valued at about A$100 million from renegotiating contracts with suppliers and vendors including computer-services providers. Information-technology spending, currently 3.8 percent of annual revenue for the Qantas-branded carrier, will move closer to the 1 percent Jetstar spends, Joyce said. Jetstar yesterday posted a 4.9 percent rise in earnings to A$107 million as budget-conscious passengers switched from Qantas’s full-service carrier. It was the only part of company’s flying operations to grow passengers, sales and earnings in the past year. The Qantas unit has copied Jetstar by adopting touches such as charging passengers a fee to book an exit-row seat with extra leg-room. Joyce now also plans to introduce text-message check- in for Qantas, allowing customers to go straight to the gate, reducing the need for staff at counters. For other cost-saving measures, Joyce will need the cooperation of airports and air-traffic controllers. These include reducing the amount of time planes spend on the tarmac with their engines running and flying more direct routes using new satellite-navigation systems. “It gives a good customer outcome because it gets customers there faster and more than likely on time,” Joyce said. “By working with air-traffic control and working with the airports we can leverage technology like that.” To contact the reporter on this story: Robert Fenner in Sydney rfenner@bloomberg.net ; Shani Raja in Sydney at sraja4@bloomberg.net .

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Macquarie’s Moore Says Fund Model Evolving, Not Broken, Amid Asset Sales

July 28, 2009

By Shani Raja July 29 (Bloomberg) — Macquarie Group Ltd. Chief Executive Officer Nicholas Moore said the investment bank’s business model that relied on so-called satellite funds to drive 16 years of rising profits isn’t broken and is evolving. “It’s a collection of businesses that all operate very closely together at the margin,” Moore said before the company’s annual general meeting in Sydney today. “At all our groups our people are looking at the market, looking at what’s available, and making use of opportunities.” Moore has been distancing the company from its publicly traded funds after an unbroken streak of earnings gains ended last year as the bank wrote down the value of the satellite funds it spawned.

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Macquarie’s Moore Says Fund Model Evolving, Not Broken, Amid Asset Sales

July 28, 2009

By Shani Raja July 29 (Bloomberg) — Macquarie Group Ltd. Chief Executive Officer Nicholas Moore said the investment bank’s business model that relied on so-called satellite funds to drive 16 years of rising profits isn’t broken and is evolving. “It’s a collection of businesses that all operate very closely together at the margin,” Moore said before the company’s annual general meeting in Sydney today. “At all our groups our people are looking at the market, looking at what’s available, and making use of opportunities.” Moore has been distancing the company from its publicly traded funds after an unbroken streak of earnings gains ended last year as the bank wrote down the value of the satellite funds it spawned.

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The Best And Worst Airports To Sleep In

July 20, 2009

SINGAPORE (Reuters) — On a shoe-string, stuck or just need some shut-eye? Avoid Paris’ Charles de Gaulle at all costs, but embrace Singapore’s Changi, according to a survey that rated the world’s 10 worst, and best, airports to sleep in

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