NightBlogger

24/7 Wall Street
Lay-Offs Spread Beyond Autos And Retail
For awhile, analysts had hoped that the heaviest lay-offs in the economy would be restricted to already troubled industries including retail, automotive, and airlines. At least companies in those sectors were losing money. But, news out of places like Nortel, Whirlpool, and Hewlett-Packard, indicate the prophylactic job cuts are being made in almost every industry. Even Dell, which made over $700 million last quarter and has $8 million of cash on hand is taking about sharply lowering expenses. According to Reuters, “Planned layoffs at U.S. firms surged to their highest in nearly five years during October, with cuts in the financial and auto sectors leading the charge as the economic outlook worsened, a report by outplacement firm Challenger, Gray & Christmas said”. That means that the pace of job cuts could be rising at a rate faster than the 200,000 or so people who were put out of work last month. More

More than five million British passengers could be priced out of the budget holiday market as airlines raise their fares, bringing the era of cheap travel to an end. Holidaymakers preparing for the traditional summer getaway this week may find that when they come to book their next break the fares have become unaffordable. Ticket prices are expected to rise by 10 per cent this year and next as the cost of oil pushes up airline fuel bills. The dramatic increase in the price of oil, which has doubled in the past year, will almost certainly lead to radical changes in the airline industry once this summer season ends. Carriers will raise fares, cut the number of flights they offer and some well-known names will go out of business. More

NEW YORK (CNNMoney.com) — Thousands of layoffs, hundreds of grounded planes and 21 price increases may not have been enough to save the embattled airline industry from the damaging effects of high fuel prices. According to a report on the nation’s top airlines released by Fitch Ratings Tuesday, record fuel costs and weak cash flow may lead to “multiple bankruptcies and liquidation” for major U.S. airlines in 2009. “The industry’s current structure is unsustainable in the current fuel environment,” said William Warlick, a senior director at Fitch and author of the report. Airlines have attempted to cut costs by reducing capacity, downsizing, and hiking fares and fees, but the moves may not be able to improve their cash flow. More

Auto plants in Spain were paralysed and Portugal’s main airport banned planes from refueling Wednesday as a third day of strikes by thousands of truckers caused heightened chaos and shortages. Truckers in Thailand also threatened to strike next week while their counterparts in South Korea plan to stop work on Friday, as the outrage over soaring fuel prices intensified around the world.

Tens of thousands of truck drivers launched stoppages in France, Portugal and Spain on Monday to demand government help to cope with the rising price of fuel caused by rocketing oil prices, which last week reached almost 140 dollars a barrel. The protests have paralysed roads, causing huge tailbacks, notably on the French-Spanish border and around major Spanish cities, and left supermarkets short of fresh produce and some petrol stations without supplies. Two strikers were run over by vehicles and killed at picket lines on Tuesday. The Spanish auto plants of Seat, Nissan, Renault, PSA Peugeot Citroen and Mercedes Benz said they had cut or halted production as the strike left them short of parts. More

Emily Kaiser, Matt Daily
Reuters
Oil’s relentless price rise has pushed U.S. drivers off the road, curbed consumers’ appetite for expensive goods, forced airlines into their deepest cuts in years and threatened car makers with a flood of red ink. It all points to a dramatic shift in the U.S. economy as oil’s surge above $130 per barrel forces already cash-strapped households and companies to rethink business as usual, and the changes are likely to be lasting, even if energy prices retreat.

Sales of gasoline-guzzling sport-utility vehicles have plummeted. The prices for used SUVs dropped by 17.5 percent year-over-year in April, according to Manheim Consulting, which tracks used vehicle sales. Compact cars were up 2 percent. Businesses are reacting even more dramatically. “Going green” with energy efficiency programs, once a popular image-burnishing exercise, have now become a matter of survival for oil-intensive companies.
Read more