Archive for January, 2009

Continental Airlines posts loss on hedges, pensions (Reuters)

Thursday, January 29th, 2009 | Finance News

NEW YORK (Reuters) –
Continental Airlines (CAL.N) posted a quarterly loss on Thursday as it lost money on some fuel-hedging contracts and made pension payments to pilots taking early retirement as the company pares back its flight schedule.

The No. 4 U.S. carrier said its fourth-quarter net loss widened to $266 million, or $2.33 per share, from $32 million, or 33 cents per share, a year earlier.

Excluding one-time items, Continental reported a loss of 84 cents per share. On that basis, Wall Street forecast a loss of 89 cents, according to Reuters Estimates.

The airline industry was clobbered last year by soaring fuel prices in the first half and an economic recession in the second half.

(Reporting by Bill Rigby; Editing by Lisa Von Ahn)

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Crisis takes toll on German jobs, Japanese profits (Reuters)

Thursday, January 29th, 2009 | Finance News

LONDON (Reuters) –
German unemployment rose more than expected, Japanese firms felt more pain from the financial crisis and a big Russian bank said on Thursday its worst case scenario was that 10 percent of its loans were bad.

Signs of global corporate distress underlined the need for dramatic responses as U.S. President Barack Obama's $825 billion fiscal stimulus plan passed through the House of Representatives on Wednesday.

It marked the first legislative boost to his presidency, but showed the depth of partisan divisions as, despite an Obama charm offensive, every Republican vote opposed the bill. The Senate is expected to approve a similar version.

In Japan, Sony Corp followed fellow electronics maker Canon Inc with a dismal profit report. It fell into the red in the latest quarter and reiterated its forecast for a record annual loss due to sliding demand and a stronger yen, while rival Nintendo Co cut its full-year outlook for the second time in three months.

Nippon Steel, the world's second-biggest steelmaker, cut its 2009 net profit forecast by 36 percent on weaker demand for everything from household appliances to cars.

Electronics group Toshiba Corp said it planned to cut costs by $3.3 billion next business year by slashing capital spending and contract jobs.

"UNCERTAINTY REMAINS HIGH"

Fallout is still growing from a crisis that has already cost trillions of dollars and threatens millions of jobs.

German unemployment rose in January by 56,000 month-on-month in seasonally adjusted terms, compared with a mid-range forecast in a Reuters poll of 37 economists for a rise of 30,000.

The unadjusted jobless total rose to 3.489 million.

Bank of Japan Deputy Governor Kiyohiko Nishimura told business leaders: "Governments and central banks are acting promptly, but uncertainty over the outlook for the global economy, as well as the financial crisis in the United States and Europe, remains high."

He added: "It's not certain whether the measures taken up till now are enough." Nishimura said he expected the Japanese economy, widely expected to be entering its longest recession in modern times, to start recovering from October.

The U.S. Federal Reserve said on Wednesday it was prepared to buy long-term Treasury bonds if that would help improve credit market conditions. But U.S. government debt prices fell sharply as investors were disappointed that the Fed did not make a firm commitment to buy bonds.

Bond purchases could help to lower mortgage rates and curb the housing downturn at the heart of the global crisis. The U.S. central bank held its main interest rate in a range between zero and 0.25 percent and said the rate could stay unusually low for some time.

In Wellington, New Zealand's central bank slashed rates by 1.5 percentage points to a record low 3.5 percent

NIKKEI UP, EUROPE DOWN

Japan's Nikkei stock average closed 1.8 percent higher, boosted by exporters such as Honda Motor Co., gaining on a softer yen, and mirroring the generally positive response to Obama's stimulus package and other measures.

European stocks were lower, however, with the FTSEurofirst index down 1.57 percent at 0933 GMT.

There were new signs of the depth of the crisis in Russia. The head of its second-largest bank, VTB, said non-performing loans totaled about 3.8 percent but the bank was allowing for a "worst-case scenario up to 10 percent."

CEO Andrei Kostin said VTB might issue preference shares later this year as part of a 200 billion rouble ($6 billion) state recapitalization.

And the head of state corporation VEB, entrusted with distributing $50 billion of state money to help Russian companies refinance their foreign debts, said companies had made bids for around $90 billion.

Speaking in Davos on Wednesday, Russian and Chinese leaders took swipes at the United States as they blamed the global crisis on debt-fueled consumption.

"The existing financial system has failed," Russian Prime Minister Vladimir Putin said. Chinese Premier Wen Jiabao blamed "the blind pursuit of profit."

(Editing by Kevin Liffey)

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JP Morgan says has “plenty of capital” (Reuters)

Thursday, January 29th, 2009 | Finance News

DAVOS, Switzerland (Reuters) –
JPMorgan Chase & Co (JPM.N) has "plenty of capital" and wants governments to stop talking about nationalizing banks, its CEO said on Thursday.

"JPMorgan would be fine if we stopped talking about (the) damn nationalization of banks ... we've got plenty of capital," Jamie Dimon said at the annual meeting of the World Economic Forum in Davos, Switzerland.

On January 15, JP Morgan reported a 76-percent fall in fourth-quarter profit as it wrote down bad loans, signaling that even the bank that has avoided the worst of the credit crunch is struggling with the recession.

At the time, Dimon called the results "very disappointing."

Underlining the bank's confidence, Dimon said JP Morgan had lent $150 billion in the last 90 days including $50 billion in the interbank market, also to European and British banks, but added: "It's scary because at the end of the day you have to survive."

"I'm hoping by the end of the year we're coming out of the crisis," he told journalists.

He said more acquisitions were unlikely as JP Morgan was busy absorbing recent buys.

Dimon admitted bankers had done "some really stupid things" but he also hit out at policy makers and regulators, adding that the Basel II capital rules has flaws and needed to be adjusted.

"I haven't yet seen people get all the right people in a room, close the damn door and come out with a solution," he said.

The U.S. and other countries are considering setting up a so-called "bad bank" to mop up the toxic assets of stricken lenders. It would take billions of dollars of the worst assets off banks' balance sheets.

Dimon welcomed the idea: "It's all in the execution. If it's executed well, set up properly, it would be good."

He also supported creating a clearing house for credit default swaps - insurance-like protection against defaults or restructuring - although he disputed the view that a lack of regulation of the CDS market caused the financial crisis.

Dimon questioned China's tendency to blame the U.S. policy of running a large current account deficit.

"It was an imbalance that both benefited from and both are losing from. It's kind of immature and childish to act like one was to blame. One was the other side of the coin," he said.

(Reporting by Emma Thomasson; editing by Guy Dresser)

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