Archive for July, 2010

US gas stations: Stay BP or change name to Amoco? (AP)

Friday, July 30th, 2010 | Finance News

NEW ORLEANS – BP gas station owners across the country are divided over whether the oil giant stained by its handling of the Gulf spill should rebrand U.S. outlets as Amoco or another name as part of its effort to repair the company's badly damaged reputation.

Some who have seen their sales plunge because of protests say BP has already sought a fresh start by naming an American to replace its gaffe-prone British CEO, so why not change the name on gas stations marquees as a further symbol of that culture shift.

Others worry that a name change is a big deal that is risky given all the marketing dollars already spent building up the BP brand. They also believe a successful turnaround with the existing brand will have a bigger payoff.

In the aftermath of the oil spill, some BP-branded gas stations reported sales declines of 10 percent to 40 percent from Florida to Illinois. BP later responded by offering distributors of BP gasoline cash in their pockets, reductions in credit card fees and help with more national advertising.

The BP name and green-and-yellow sunflower logo took over after BP merged with Amoco in the late 1990s, replacing the Amoco name and its blue-and-red torch inside an oval logo.

There is precedent for such a drastic move to return to the Amoco name or to go with a new name. Think AirTran after the ValuJet crash and Xe Services after the killing of civilians by Blackwater Worldwide guards in Iraq.

John Kleine, who heads a trade group that represents distributors of BP gasoline in the U.S., told The Associated Press that interest in changing names has not reached a fever pitch by any means, but it has supporters and is percolating among station owners ahead of their annual convention with BP executives in October.

"Is it on the minds of people? Sure," Kleine said. "It would not be a topic of conversation if not for the oil spill."

Kleine noted that many distributors would still like BP to try to rebuild its existing brand, and if that cannot be done, then to consider alternatives.

Distributors in many cases also own and operate stations.

Two BP officials said in e-mails that the company is not considering rebranding U.S. gas stations.

BP owns just a fraction of the more than 11,000 stations across the U.S. that sell its fuel mostly under the BP banner. ARCO, a BP affiliate, is predominant in the West. Kleine said the Amoco name is no longer supposed to be used, but acknowledged in rare cases it may still exist in a few locations. Most BP-branded stations are owned by local people whose primary connection to the oil company is the logo and a contract to buy gasoline.

Bob Juckniess, who owns 10 BP-branded stations in the Chicago area, is in the camp that wants BP to consider rebranding to Amoco at U.S. outlets.

"The BP brand is very tarnished right now, not just the brand but the reputation as a company is tarnished," said Juckniess. He added, "Amoco was very well known and had a great reputation as a name and a brand."

Juckniess said he feels so strongly about the issue that he would "urge BP to look at the ramifications of such a change."

It is noteworthy that Bob Dudley, the American who will replace Tony Hayward as CEO on Oct. 1, worked for 20 years at Amoco Corp.

On the other side of the debate is Jeff Miller, whose company owns, operates and supplies roughly 56 BP-branded stations primarily in southeastern Virginia.

He said that if BP does the job right and invests back in its brand and customer base, it stands to gain more by not changing the name at U.S. stations.

"When you look at all the case histories of all that have done it well, whether it is Toyota, Tylenol or Exxon, they have all reinvested in their brand and done a better job," Miller said. "If you just change the name and don't change the behavior, have you really gained anything?"

Miller said he has heard from a number of station owners who have suggested BP rebrand U.S. stations as Amoco, but he describes that as a "knee-jerk reaction." "I think you get a better return by working on repairing your reputation than starting fresh," he said.

Jim Donnini, whose company owns, operates and supplies roughly 75 gas stations in Florida that fly under brands including Chevron, Exxon, Shell, Sunoco and Valero, said Amoco was a very strong brand in Florida.

"Everybody thought they missed their opportunity to keep it that way," Donnini said of BP, referring to the aftermath of the Amoco merger.

Donnini, who doesn't own any BP stations, said he has heard from owners of BP-branded stations in Florida who would like BP to consider a name change at U.S. stations.

"It's really a shame the independent businessmen that fly that BP flag are being victimized," Donnini said.

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British Airways posts Q1 loss of $190 mln (AP)

Friday, July 30th, 2010 | Finance News

LONDON – British Airways PLC on Friday said its losses widened 15 percent to 122 million pounds ($190 million) in the three months ending June 30 as operations were disrupted by cabin crew strikes and a cloud of volcanic ash from Iceland.

However, the airline said that underlying revenue increased and it achieved further cost reductions. Chief Executive Willie Walsh said he still expected the carrier to break even for the full year.

For the three months, BA said revenue of 1.94 billion pounds was 2.3 percent less than in the same period a year ago. Without the disruptions, BA said passenger revenue would have been up by 11 percent compared to a year earlier.

The net loss compared to a loss of 106 million pounds a year ago.

British Airways shares were up 1.2 percent at 218.5 pence as trading opened on the London Stock Exchange.

"The trends in our passenger and cargo traffic continue to be positive with yields up and costs down," said Walsh.

"Together this led to a reduced operating loss for the period though pretax losses increased as a result of additional finance costs and the impact of non-cash foreign exchange movements."

BA was hit by 23 days of strikes by cabin crew in May and June and suffered a major interruption of operations in April due to the volcanic ash cloud from Iceland. Cabin crew have voted down BA's latest contract offer, and may call further strikes.

The airline had previously reported that first-quarter traffic was down 14.9 percent compared to a year earlier and capacity was down 11.3 percent.

The first quarter loss follows a record annual loss of 425 million pounds ($665 million) for 2009-10.

Walsh said the airline was braced for further strikes.

"I want to reach a resolution but we are preparing for further industrial action. I am confident we will operate 100 percent of our long-haul services and we are looking at the short-haul program," he said.

The CEO said the offer recently rejected by the union was BA's "best and final offer."

"It addresses all the genuine concerns and I still believe it forms the basis of a resolution to the dispute," he said.

Derek Simpson, joint leader of Unite union, said his members wanted to see the airline thrive.

"This is a dispute over 10 million pounds. Contrast that with the 164 million pounds in (pretax) losses this quarter alone and questions must be asked about the direction of BA's management and the sense of them maintaining this dispute with cabin crew," Simpson said.

BA's privately held British rival, Virgin Atlantic, said Friday that it had an operating loss of 132 million pounds in the three months to June 30, although revenue was up 10 percent to 513 million pounds.

British Airways recently gained regulatory clearance for its merger with Spain's Iberia Airlines, and for a joint trans-Atlantic business with Iberia and American Airlines.

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Dudley to outline BP plans to help Gulf recover (AP)

Friday, July 30th, 2010 | Finance News

NEW ORLEANS – Incoming BP CEO Bob Dudley was set to outline his company's long-term efforts to help the Gulf of Mexico recover from the oil spill Friday morning, and will be getting help from a Clinton administration-era emergency management official.

The oil giant said Dudley would be in Biloxi, Miss., to announce that former Federal Emergency Management Agency head James Lee Witt will support its recovery efforts. Local officials, especially in Louisiana, have been clamoring for more long-term commitments in the face of reports that the oil spill is dissipating, at least on the water's surface.

Retired Coast Guard Adm. Thad Allen, the government's oil-spill response chief, had what he called a frank and open discussion Thursday with Louisiana Gov. Bobby Jindal and coastal parish officials concerned that the Coast Guard and BP PLC will pull back from the spill response once the oil is stopped permanently.

"One of the things we absolutely wanted to get today was their commitment that they're in it for the long-term," Jindal said. "Look, all those (federal) people in the room, with no disrespect ... they're going to be rotated out to different jobs. Everybody here is still going to be here dealing with this oil whether it's a year from now or years from now."

Plaquemines Parish President Billy Nungesser said it's clear the cleanup effort is being scaled back even though oil is still showing up on the coast.

"They say they are not (pulling back) but already they have canceled catering contracts, they've stopped production of boom at factories," he said.

"We know there's a lot of oil out there," Nungesser said. "It's going to continue to come ashore, and we're going to hold their feet to the fire to make sure they're there until all the oil is gone out of the Gulf of Mexico before we pull all of the assets out of our parish."

Allen said federal, state and local officials will come up with a plan by next week for how to clean up any oil that might continue washing up on beaches and in wetlands.

Allen has said it has become harder to find oil on the surface of the Gulf, but Nungesser said Thursday that reports that oil has been disappearing have been exaggerated.

"Yesterday there was a flight where no oil was seen. I don't know how they took that flight, but they must have bobbed and weaved around the oil because in Plaquemines Parish there is oil all over," Nungesser said.

The gusher set off by an April 20 oil-rig explosion spewed between 94 million gallons and 184 million gallons into the Gulf before a temporary cap stopped the flow July 15. A permanent fix is expected to be weeks away.

Allen said that once the oil is stopped for good, the cleanup effort may start ratcheting down. The work has involved 11 million feet of boom, 811 oil skimmers and 40,000 people.

Little of the oil remains on the water, but that doesn't mean it has all vanished. Scientists are worried that much of it has been trapped below the surface after more than 770,000 gallons of chemical dispersant were used to break up the oil a mile deep. They have found evidence of massive clouds of oil suspended in the water.

The Coast Guard expects oil to keep showing up on Gulf Coast beaches four to six weeks after the well is killed. Allen said there is now little chance that any of the spilled oil will reach the East Coast, and the odds will go to zero as the well is killed.

A procedure intended to ease the job of plugging the blown-out well for good could start as early as the weekend, Allen said. The so-called static kill can begin when crews finish work drilling the relief well 50 miles offshore that is needed for a permanent fix.

Allen said crews would drop in casing for the relief well later Thursday, and that could speed up work on the static kill, though he did not say by how much. He previously said it would begin late Sunday or early Monday.

The static kill, which involves pumping heavy mud into the busted well from the top, is on track for completion some time next week. Then comes the bottom kill, where the relief well will be used to pump in mud and cement from the bottom; that process will take days or weeks, depending on the effectiveness of the static kill.

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Associated Press Writers Harry R. Weber, Brian Skoloff and Cain Burdeau contributed to this report.

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