Financial life in a big town

Air Canada's pilots have ratified a tentative agreement that the airline says is necessary to prevent it from filing for bankruptcy protection for the second time in less than six years.

The Air Canada Pilots Association said today that a small majority – 55 per cent – of its more than 3,000 members have voted in favour of an agreement that includes a 21-month moratorium on payments to the airline's pension plans and a wage freeze over the same period.

“With our members' support, the airline must now move ahead on negotiations with its other key stakeholders to complete the fundamental restructuring of its business,” said Captain Serge Beaulieu, the chair of the association's Master Executive Council, in a statement.

“We will continue to press Air Canada for the other changes required to rebuild the airline and continue to improve customer service so that it can support jobs, pensions and other economic benefits for Canadians.”

Three other unions representing Air Canada employees have already ratified similar agreements, with the union representing flight attendants revealing that its members approved the deal on Sunday cash advance lenders.

The International Association of Machinists and Aerospace Workers is now the only major union that has not ratified a tentative agreement with the airline. Members of the union representing mechanics and other ground workers initially voted against the pact, but are scheduled to vote again on the same agreement this week.

The agreements also call on Air Canada to raise $600 million in financing – money that is necessary to keep the airline from running afoul of certain covenants with credit card processing companies.

Analysts have said the temporary labour pacts will give Air Canada some financial breathing room at a time when the weak economy has caused consumers to dial back spending on air travel. But they also warn that a more comprehensive restructuring of the country's largest airline will be required if it is going to remain competitive over the long-term.

Source

When Jessi Neff conducted her first board meeting as the new chief executive of Flyer Enterprises, the pressure was on the university senior.

"I was nervous," said Neff, who’d spoken at the board meetings before, "but I never led the conversation."

In a room full of executives and board members, Neff delivered her strategy for leading the company to another profitable year.

In her final year at the University of Dayton, Neff, a St. Charles native, is already leading a $1.4 million company that employs 180 students. The company, Flyer Enterprises, is one of the largest student-run businesses in the nation.

Flyer Enterprises runs seven divisions, which include caf

Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., gives Timothy Geithner and Ben S. Bernanke an “A” for their efforts to revive credit markets.

Geithner, the U.S. Treasury secretary, and Bernanke, the Federal Reserve chairman, deserve just a “B” for results because “it’s very difficult to get it right,” El-Erian, 50, said in an interview from Pimco’s headquarters in Newport Beach, California. “They’ve been imaginative, they’ve been bold, they’ve been willing to take risks. On outcome it’s a ‘B.’”

The policy makers have taken unprecedented steps over the past year to restore confidence to credit markets. The Federal Reserve doubled its balance sheet and introduced programs to strengthen the market for consumer loans, such as the Term Asset-Backed Securities Loan Facility, or TALF. The Treasury on July 8 started its program to buy as much as $40 billion in devalued assets from financial institutions.

“We’re in a phase of policy experimentation,” El-Erian said. “We’ve never seen this.”

El-Erian compared the predicament of the policy makers to pilots trying to control a plane that’s caught midair in a storm. “Our assumption is that the pilots know what to do,” El-Erian said. If the cockpit door was open, “we would see the pilots banging on the instruments because they’re getting readings they’ve never seen before.”

‘New Normal’

Pimco, an early advocate of the U.S. Treasury’s Public- Private Investment Program, in June decided to withdraw its application to participate. This week, the firm cited “uncertainties” in the plan’s design. El-Erian declined to comment on the decision.

El-Erian shares the position of co-chief investment officer at Pimco with founder Bill Gross. El-Erian, a former deputy director of the International Monetary Fund, in May used the phrase “new normal” to describe a world characterized by heightened government regulation, slower growth and rising unemployment.

El-Erian said the bankruptcy of Lehman Brothers Holdings Inc. in September gave the financial markets a “cardiac arrest” that accelerated the credit-market crisis. That week, worried about a breakdown of the banking system, he asked his wife to withdraw as much money from the cash machine as she could personal business cards.

High Unemployment, Slow Growth

“The financial system has normalized, although it is not operating as it should,” El-Erian said. “The economic crisis will be with us for a while.”

El-Erian said that unemployment may peak at between 10.5 percent and 11 percent and will stay above 7 percent for years. U.S. growth rates will slow to 2 percent or less over the next five years, he said.

Pimco, a unit of German insurer Allianz AG, manages $756 billion including the largest U.S. mutual fund, the $161 billion Pimco Total Return Bond Fund.

Pimco has provided advice over the past year to the U.S. government on policies to help financial markets recover. The firm as early as 2005 shunned subprime mortgage-related assets in its funds, citing a looming crisis in the market.

El-Erian said the “new normal” means that investors must reassess how much money they can afford to lose. Investors also need to look outside the U.S. and put more money into international investments.

‘Regime Shift’

“We’re coming from a world in which the U.S. was the engine of growth,” El-Erian said. “There will be a complete regime shift in terms of the investment paradigm.”

El-Erian has been at Pimco since 2008, when he rejoined the company after a stint as president and CEO of Harvard Management Co., which runs the endowment of the Cambridge, Massachusetts school, the world’s largest university fund. El-Erian was there from February 2006 to December 2007.

El-Erian first joined Pimco in 1999, and was a senior member of its portfolio management and investment strategy group. He led Pimco’s Emerging Markets Bond Fund to an annualized gain of 19 percent in the five years ending 2005. Earlier, he had served at the IMF for 15 years through 1997.

El-Erian is the son of an Egyptian diplomat and is fluent in Arabic, English and French. He is the author of “When Markets Collide: Investment Strategies for the Age of the Global Economy,” published last year by McGraw-Hill. The book deals with the shifting relationships between international markets.

Source

Local business owners are being warned by the Better Business Bureau about a ploy to get companies to pay for meaningless awards and plaques.

The BBB said area businesses in recent months had been getting notifications that they had won awards from an entity called U.S. Commerce Association or U.S. Local Business Association. The businesses are required to pay to receive the award. The cost of the award ranges from $79 to $199, the BBB reported.

The BBB said this appeared to be a vanity awards scheme, where companies sell awards that are not based on achievements or independent judging used car loans. The bureau warns business owners to be wary if their business receives an award for which it did not apply or if the awarding group cannot say how the business was nominated.

The associations could not be reached. An e-mail sent Wednesday through the U.S. Local Business Association’s website was not returned. No phone number is listed on the company’s site.

Source

The Boeing Co. on Wednesday rolled out the first of two dozen F/A-18 Super Hornets bound for the Royal Australian Air Force over the next three years.

While a shot in the arm for Boeing’s Integrated Defense Systems in St. Louis, the first international sale of its latest multi-role fighter jet occurs at a time of uncertainty for the St. Louis F/A-18 line. The Defense Department sought just 31 in next year’s budget — or nine fewer than expected.

Boeing and its supporters are pushing for another multi-year contract for the Super Hornets. Boeing officials say multi-year contracts with the U.S. Navy help hold down production costs and have saved taxpayers $1.7 billion so far.

Boeing said the first of the Super Hornets bound for the Royal Australian Air Force will be delivered ahead of schedule to the Navy, which will test it and then deliver it to Australia next spring.

Australia will pay $3 billion in U.S. dollars for the 24 aircraft, said Marcia Hart-Wise, a Department of Navy spokeswoman. That price includes service and support through 2020.

United States and Australian military leaders said the rollout of the F/A-18F was an important cooperative milestone between the two countries. The planes are equipped with the latest radar and weapons systems.

Boeing also is vying to provide F/A-18 Super Hornets to India, Denmark, Brazil, Greece and Japan.

Congress has added language supporting the U fast payday loans.S. purchase of more Super Hornets to proposed defense authorization bills.

Sen. Christopher "Kit" Bond, R-Mo., also went to bat for the purchase of more F/A-18s "as the most cost-effective, near-term means to address the Navy’s tactical fighter shortfall," and a multi-year contract, according to a June 22 letter he co-authored to the Senate Appropriations Committee. U.S. Sen. Claire McCaskill, D-Mo., said she also favors multi-year procurements in the future.

Boeing is the region’s second-largest employer and its F/A-18 fighter jet line employs 5,000 workers.

St. Louis Mayor Francis Slay trumpeted Boeing’s regional importance — from jobs to philanthropy — in remarks he made at Wednesday’s ceremony. Other speakers included Rear Adm. David Philman, director of air warfare for the U.S. Navy, and Air Marshal Mark Binskin, chief of the Royal Australian Air Force.

Despite the uncertainties, top Boeing officials remain upbeat about the future of aircraft manufacturing here.

"In case anybody’s wondering, we’re going to be building Super Hornets here for a long time to come," said Jim Albaugh, president and chief executive officer of Boeing’s Integrated Defense Systems.

Source

The big quarterly rally in value stocks is a bearish sign to some of the largest money managers, who say it shows that the

equity market has relied on companies with the worst finances to fuel its rebound.

"There was a junk rally, where stocks with the most problems were leaders," said Charles Dautresme, a strategist at Axa Investment Managers, which oversees about $651 billion in Paris. "The biggest of the rally has passed."

Money-losing companies in the MSCI World Value Index with the most debt climbed an average of 38 percent last quarter, compared with a 20 percent overall gain for the MSCI World Index, according to data compiled by Bloomberg.

That pushed value stocks, or those trading at the lowest level relative to their earnings or assets, in the index up 22 percent — the biggest increase since at least 1995.

The World Value index comprises global stocks identified as undervalued by using price to book-value and price to 12-month forward earnings ratios, and dividend yields.

Gains will be harder to come by as investors search for profit growth to justify the 41 percent rally in the MSCI World since March 9, according to James Dunigan of PNC Financial Services Group Inc. Price-to-earnings ratios for value shares shrunk relative to growth stocks in the second quarter, showing increasing skepticism that banks and automakers will boost earnings this year, according to data compiled by Bloomberg.

"The stocks that participated in the rally from March lows were some of the lower-quality names," said Dunigan, the chief investment officer at PNC’s wealth-management unit, which oversees $100 billion in Philadelphia cash loans. "They won’t build the foundation that we will need for a sustained rally from here."

Three of the value gauges’ five best-performing stocks in the second quarter were financial companies — Lincoln National Corp.; Fifth Third Bancorp; and Principal Financial Group Inc., based in Des Moines, Iowa. The fourth-biggest gain was posted by Ford Motor Co., based in Dearborn, Mich., the only major U.S. automaker to avoid bankruptcy.

Lincoln, the Philadelphia-based insurer that has reported two consecutive quarterly losses and is taking $950 million in U.S. aid, surged 157 percent last quarter for the second-best performance in the MSCI value measure.

Fifth Third, the Cincinnati-based lender ordered by regulators in May to raise $1.1 billion after the Feds stress tests, jumped 143 percent. Ford surged 131 percent. The second- largest U.S. automaker posted a record loss in 2008.

"We remain circumspect about stocks that doubled and tripled after being massacred, weren’t expensive and weren’t very beautiful items in the first place," said Roland Lescure, who oversees $119 billion as chief investment officer of Groupama Asset Management in Paris.

Source

Canada needs a watchdog with teeth to oversee the credit and debit card industries because the federal government has so far failed to rein in climbing interest rates and fees, says a Senate committee.

That was one of several recommendations in a long-awaited report tabled yesterday by the Standing Senate Committee on Banking, Trade and Commerce.

The recommendations, while non-binding, take a swipe at Finance Minister Jim Flaherty’s recently announced proposals to regulate credit cards, arguing many of his initiatives "do not go far enough."

While the report stops short of calling for an outright cap on interest rates and fees, its main recommendation is for Ottawa to appoint an "oversight board" with the power to do just that.

Pierrette Ringuette, the Liberal senator who spearheaded the study, urged Flaherty to adopt the report’s recommendations without delay. If he doesn’t act, "that means that in the minds of the current government, consumers and small- and medium-sized business don’t matter," she said

A spokesperson said Flaherty would review the Senate report along with another upcoming study by the House of Commons joint Industry and Finance committees.

Business reaction to the report was mixed.

The banking industry and MasterCard Canada issued a stern warning that regulation would hurt consumers and could even limit credit availability.

Visa Canada and Interac said they were still reviewing it.

Retailers welcomed the report, which gives them tools to manage their card processing costs, including surcharging consumers, a move that worries the Consumers’ Association of Canada.

Senators want the oversight board to be created within an existing federal organization. Ringuette wants it to fall under the auspices of either the Office of the Superintendent of Financial Institutions or The Bank of Canada.

The yet-to-be struck board is already facing a Dec. 31 deadline to recommend any "regulatory or legislative measures … required to ensure fairness" in both the credit and debit card systems, according to the report.

That would include a probe of banks’ actual costs and profits for credit card lending, Ringuette said. She noted financial institutions declined to provide that proprietary information to senators, which is partly why the committee declined to recommend its own cap.

"If they (the oversight board) do the proper work … we should get some proposed maximum fees for business and consumers," she said.

The report said the oversight board should also publish annual information on behind-the-scenes costs, while establishing a code of conduct for payment systems participants and practices for setting fees and rates pay day loans.

Retailers, independent business and supermarket chains hailed the idea of closer industry scrutiny.

"We don’t want a lot of regulation. But we want oversight. Because it’s just the wild, wild west right now and small, independent businesses are getting creamed in some cases," said Dan Kelly, a vice-president with the Canadian Federation of Independent Business.

Although the Senate committee has no power to enforce its recommendations, "it can’t be ignored," said Diane Brisebois, president and chief executive officer of the Retail Council of Canada. "We believe they will not only enact everything that’s in it, they may go further."

Ottawa is also being asked to bolster the mandate of the Financial Consumer Agency of Canada by requiring it to monitor banks’ compliance with any new federal regulations.

The report also demands beefed-up disclosure requirements for consumers, such as the number of months it would take to pay off the balance owing under a variety of scenarios, far beyond what Flaherty has proposed.

The committee also urges Flaherty to replicate some of the consumer-protection measures recently enacted in the United States, including: ensuring that card issuers charge interest only on the net balance owing; shielding consumers from rate increases during the first year; and preventing banks from hiking the rates on pre-existing balances.

Senators are also asking Ottawa to ban banks from offering freebies such as T-shirts to students during on-campus promotions. They also want Parliament to review all relevant legislation every five years.

The Canadian Bankers Association said it would examine the Senate report in more detail but suggested consumers ought to be concerned about "unintended consequences" of regulation.

"For example, regulations may limit the banks’ ability to provide some of the services customers have come to expect, limit the number of credit card options and may reduce credit availability to some customers," the CBA said.

The consumers’ association said it doesn’t want caps on interest rates because consumers could lose other perks, such as airline points and fraud protection.

Flaherty, trying to brand himself as a consumer advocate, released his own set of proposals for credit card regulation in May.

Source

TAMPA, Fla.–Television pitchman Billy Mays likely died of a heart attack in his sleep, but further tests are needed to be sure of the cause of death, a medical examiner said Monday.

Hillsborough County Medical Examiner Vernard Adams said Mays suffered from hypertensive heart disease, and the wall of the left ventricle of Mays’ heart and the wall of one of his arteries were enlarged. The boisterous, bearded 50-year-old, known for hawking OxiClean and other products on national commercials, was found dead Sunday by his wife in their Tampa condominium.

"The heart disease is perfectly consistent with sudden death," Adams said.

An official cause of death will be issued after toxicology and other tests are completed in eight to 10 weeks.

"While it provides some closure to learn that heart disease took Billy from us, it certainly doesn’t ease the enormous void that his death has created in our lives," his wife, Deborah, said in a statement. "As you can imagine, we are all devastated."

Adams said Mays was taking the prescription painkillers Tramadol and hydrocodone for hip pain, but there was no indication of drug abuse. Mays had planned to have hip-replacement surgery Monday.

Mays told his wife he didn’t feel well when he went to bed sometime after 10 p.m. Saturday. Earlier in the day, he said he was hit on the head when his flight from Philadelphia had a rough landing at Tampa International Airport. The airline said no passengers reported serious injuries.

Adams said the autopsy showed no evidence of head trauma.

In a 911 tape released Monday, a frantic woman tells emergency operators she found Mays cold and unresponsive. The woman isn’t identified, but police have said Deborah Mays found her husband dead.

When asked what had happened, the caller says she doesn’t know.

A second person got on the phone as the operator encourages them to get Mays on the floor to start CPR personal loans no credit check.

"We can’t get him up, ma’am," the woman says. "He’s gone."

Born William Mays in McKees Rocks, Pa., on July 20, 1958, Mays developed his style demonstrating knives, mops and other "As Seen on TV" gadgets on Atlantic City’s boardwalk. For years he worked as a hired gun on the state fair and home show circuits, attracting crowds with his booming voice and genial manner.

After meeting Orange Glo International founder Max Appel at a home show in Pittsburgh in the mid-1990s, Mays was recruited to demonstrate the environmentally friendly line of cleaning products on the St. Petersburg-based Home Shopping Network, now known as HSN.

Commercials and informercials followed, anchored by the high-energy Mays using them while tossing out kitschy phrases like, “Long live your laundry!"

HSN released a statement Monday morning, praising Mays as a “legend in the electronic retail history whose personality, entrepreneurial spirit and thoughtfulness for others have always been larger than life."

His ubiquitousness and thumbs-up, in-your-face pitches won Mays plenty of fans for his commercials on a wide variety of products. People lined up at his personal appearances for autographed colour glossies, and strangers stopped him in airports to chat about the products.

"I enjoy what I do," Mays told The Associated Press in a 2002 interview. "I think it shows."

Mays liked to tell the story of giving bottles of OxiClean to the 300 guests at his wedding, and doing his ad spiel (“powered by the air we breathe!") on the dance floor at the reception. Visitors to his house typically got bottles of cleaner and housekeeping tips.

Besides his wife, Mays is survived by a 3-year-old daughter and a stepson in his 20s, police said.

Source