Archive for December, 2009

JAL shares tumble as bankruptcy worries mount (Reuters)

Monday, December 28th, 2009 | Finance News

TOKYO (Reuters) –
Shares of Japan Airlines Corp (9205.T) fell 9.4 percent on Tuesday on growing concerns the struggling carrier could be put through bankruptcy court as part of a state bailout.

Sources have told Reuters that a state-backed turnaround fund now weighing whether to bail out JAL is considering using a bankruptcy procedure similar to Chapter 11 in the United States as part of its revival plan.

Shares of JAL were down 9 yen at 87 yen by the midday break in Tokyo. The benchmark Nikkei average (.N225) was down 0.1 percent.

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Air travel hassles worse after scare; shares dip (Reuters)

Monday, December 28th, 2009 | Finance News

CHICAGO (Reuters) –
Frequent flyers grudgingly remove their shoes and keep liquids in tiny bottles to appease airport security, but measures imposed after a foiled Christmas Day terror plot could tempt frustrated travelers to find alternatives to commercial airlines, experts say.

A potential erosion of air travel demand, just as it recovers from an economic recession, hit airline shares on Monday, sending the Arca airline index down 2.78 percent.

The Transportation Security Administration (TSA) tightened security on international flights to U.S. destinations after a Nigerian man was charged with trying to blow up a Northwest Airlines plane over Detroit.

New measures include more bag searches and pat-downs. During flights, passengers might have to stow personal items and stay seated during parts of the journey.

Some industry experts said more security would not irk travelers, while others said the searches and restrictions are hassles that could add time and inconvenience to trips.

"If it stays as onerous as some of the press reports that are out there today, it could have a really profound effect," said Kevin Mitchell, chairman of the Business Travel Coalition.

"If that's going to be the routine, where they have choices, they're not going to travel. They'll do something with video," Mitchell said, referring to video conferencing.

He said buses, trains, cars and private planes might become more appealing to travelers than major U.S. airlines like Delta Air Lines and AMR Corp's American Airlines.

"Beneficiaries of draconian security processes on scheduled airlines would be business travelers opting out and using the services of the large fractional and managed business jet operators," said airline consultant Robert Mann.

He cited as examples NetJets Inc, owned by Berkshire Hathaway, and Flexjet, the jet time-share company owned by Bombardier.

NEW HEADACHES

Airlines chaffed at security restrictions that the Obama administration imposed in response to the incident on the Northwest flight, with big carriers reporting delays on inbound U.S. flights because of more airport screening.

At some U.S. airports, visible increased security included more bomb-sniffing dogs and security staff. Additional security can vary depending on the airport.

Airlines have had regular briefings with U.S. officials on security directives.

They have privately questioned the effectiveness of requiring passengers to remain seated during the later stage of in-bound international flights, turning off laptops and other electronic equipment, and storing personal items at that time.

The TSA now will allow airlines to decide whether to enforce some of the in-flight security rules, a source said.

David Castleveter, spokesman for the Air Transport Association, said the trade group continues to have discussions with the TSA over security. He declined to say what steps were being considered and whether measures in place would be made permanent or extend to domestic flights.

Some industry experts said the incident and the resulting security measures would have little lasting impact on airlines and passenger traffic.

"I think it is overblown," said Basili Alukos, airline analyst at Morningstar. "It is scary what happened, and thankfully no one was injured. The big unknown is the potential demand response in light of the foiled plot. I don't think we will see much reduction in flying."

"It just adds inconveniences that people have always gotten used to," said Roger King, airline analyst at CreditSights.

"I think these things are blips," he said. "They seem amateurish. Remember the shoe bomber? Because of the shoe bomber everyone has to take their shoes off, which seems like a gross overreaction."

Shares of Delta were down 5.44 percent to $11.13 in afternoon trade on the New York Stock Exchange. AMR Corp saw its shares fall 6.27 percent to $7.63. Shares of UAL Corp, parent of United Airlines, were down 5.19 at $12.41 on Nasdaq. Shares of US Airways Group were down 8.36 percent at $4.93.

(Additional reporting by John Crawley) (Reporting by Kyle Peterson, editing by Dave Zimmerman and Robert MacMillan)

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Wall St edges up to ’09 highs as holiday sales help (Reuters)

Monday, December 28th, 2009 | Finance News

NEW YORK (Reuters) –
U.S. stocks edged higher for a sixth straight day on Monday as data indicating improved consumer spending lifted shares of retailers, offsetting a drop in airline shares amid security worries.

Indexes hit fresh closing highs for 2009, but volume was light in what was expected to be a slow last week of trading for 2009, with investors attempting to hold on to solid profits for the year.

Sales at U.S. retailers rose 3.6 percent for the period from November 1 to Christmas Eve, but gained only 1 percent when an extra shopping day this year was excluded, data from MasterCard Advisors unit SpendingPulse showed.

Still, the data was enough to bolster shares of leading retailers, including Macy's Inc (M.N), up 1.1 percent at $17.76.

"A few people were looking for a disaster, so that's a little bit of a boost," said Fred Dickson, market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.

"It looks like we're drifting into year end with a modest rally on light volume."

Airline stocks fell as the United States tightened airline security after a Nigerian man was charged with smuggling explosives aboard a transatlantic flight and attempting to blow up the plane.

The Dow Jones industrial average (.DJI) gained 26.98 points, or 0.26 percent, to end at 10,547.08. The Standard & Poor's 500 Index (.SPX) inched up 1.30 points, or 0.12 percent, to 1,127.78. The Nasdaq Composite Index (.IXIC) rose 5.39 points, or 0.24 percent, to 2,291.08.

The S&P 500 is up about 25 percent for the year.

AMR Corp (AMR.N), the parent of American Airlines, lost 4.8 percent to $7.75, while Delta Air Lines Inc (DAL.N) dropped 4.1 percent to $11.29. The NYSE Arca Airline index (.XAL) shed 1.8 percent.

On Monday afternoon, a branch of Al Qaeda said it was behind the failed Christmas Day attack, according to a Web statement.

"The airlines security concerns from the weekend certainly added a little heightened anxiety," said Micheal James, senior trader at Wedbush Morgan in Los Angeles.

U.S. oil futures rose 72 cents to settle at $78.77 a barrel, after hitting $79.12, a five-week high. Energy shares advanced, picking up their cue from climbing oil prices. Shares of Exxon Mobil Corp (XOM.N) rose 0.6 percent to $69.08.

Among other retailers, Amazon.com Inc (AMZN.O) rose 0.6 percent to $139.31 on Nasdaq after it said customers bought more e-books than physical books for the first time ever on Christmas Day.

The S&P Retail index (.RLX) added 0.3 percent.

Volume was exceptionally light on the New York Stock Exchange, with only about 705.31 million shares changing hands, compared with last year's estimated average daily volume of 1.49 billion. On the Nasdaq, about 1.25 billion shares traded, also well below last year's daily average of 2.28 billion.

Advancers outnumbered decliners on the NYSE by a ratio of about 16 to 15.

On the Nasdaq, though, the opposite trend held sway, with about five stocks falling for every four that rose. (Reporting by Caroline Valetkevitch; Additional reporting by Ed Krudy; Editing by Jan Paschal)

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