Plane Crash Another Blow to Air Travel
American Airlines, already reeling from the Sept. 11 attacks involving two of its jetliners, was hit with another tragedy when one of its Airbus A300s bound for the Dominican Republic crashed shortly after takeoff from Kennedy International Airport in New York.
All 260 passengers and crewmembers, plus at least five people on the ground, were killed.
Yet American, a unit of AMR Corp., and other airlines didn’t see a plunge in bookings after the accident, as they did after Sept. 11. Rather, there seemed to be a collective sigh of relief among travelers that the initial investigation of the crash centered on mechanical or human failure, not a terrorist act. Analysts expect American to feel a slight dip in business because of the crash, as is typical after an airline accident.
Overall, though, air travel remains depressed ahead of the busy Thanksgiving weekend, with traffic down 20% to 25% from a year ago. But with American and other airlines having slashed their operations, load factors--the percentage of the airlines’ available seats filled with passengers--are approaching normal levels of 70% or higher.
And the carriers, along with their investors, are hoping that travel picks up even more now that Congress has passed a law to further tighten airline security.
Stocks Post Weekly Gain on Positive War News
Positive news on the U.S. war effort in Afghanistan helped stocks rack up their sixth weekly gain in the last eight weeks, lengthening the rally that began in late September.
The Dow Jones industrial average finished the week up 2.7% and is up 20% since the markets hit a three-year low on Sept. 21.
The technology-heavy Nasdaq composite index gained 3.8% for the week, while the Standard & Poor’s 500 index was up 1.6%. The two indexes have advanced 33% and 18% respectively since Sept. 21.
Stocks were buoyed by the rapid progress of U.S.-backed Northern Alliance forces in Afghanistan. And a slump in the bond market convinced some fixed-income investors that it was time to switch their money to stocks.
Meanwhile, crude oil suffered its worst weekly decline in more than decade before rebounding on speculation that OPEC and other producers will reach an agreement on cutting production that would avert a price war.
Economy Delivers Mixed Messages
The faltering economy delivered mixed messages this week, with industrial production dropping for the 13th consecutive month, the longest streak since the Great Depression. But consumers were buoyed by a drop in the cost of living, as the consumer price index declined by 0.3% in October, partly the result of lower gasoline prices, air fares and hotel rates.
Meanwhile, retail sales skyrocketed last month, as consumers who had cut their spending after the attacks returned to stores, restaurants and car showrooms. Sales rose a record 7.1%, to a seasonally adjusted $306.8 billion, more than wiping out the 2.2% drop in September sales, the Commerce Department reported.
Some of the nation’s biggest retailers posted mostly positive third-quarter results. Wal-Mart Stores Inc. and Home Depot Inc. saw higher fiscal third-quarter profits, and J.C. Penney Co. rebounded from a year-ago loss. But Gap Inc. had its first loss in more than a decade as its fashions lost popularity.
Concessions Lead to Success for WTO Talks
U.S. Trade Representative Robert B. Zoellick scored a huge victory for free trade by engineering the World Trade Organization’s agreement to launch a new round of global trade talks.
The WTO’s 142 members, soon to be 144 with the admission of China and Taiwan, reached consensus on launching a new round after six days of difficult deliberations inside a heavily guarded convention center in Qatar.
The Doha ministerial, so named because member governments send their trade ministers instead of underlings, was the first held since the collapse of similar discussions two years ago in Seattle.
WTO members approved a set of documents specifying the rules for three years of negotiations that, if successful, could produce a sweeping agreement to further reduce barriers to international trade.
Before they could come to terms on the guidelines, the big industrialized countries that dominate the WTO had to make several big concessions: They promised to move faster to reduce agricultural subsidies, a painful decision for Europe in particular.
They agreed to curb the growing use of anti-dumping rules to block imports of steel and other products, a touchy issue for the United States.
They endorsed the right of developing countries to override drug patents to buy low-cost drugs to treat AIDS and other health scourges.
Low Turnout for Tech Industry Trade Show
Reflecting the malaise in the tech economy, the annual Comdex Fall trade show in Las Vegas attracted the lowest turnout in more than a decade. Key3Media, the show’s organizer, said attendance was as low as 100,000--less than half the level in 2001, and the lowest since 1987, according to Tradeshow Week magazine.
About the only crowds at the show were the ones around Microsoft’s Xbox demonstration area and at Handspring’s booth, where visitors could ogle the new Treo personal digital assistant with built-in cell phone and electronic messenger.
Otherwise, the show was notably low on news and buzz, with few industry-shaking products or partnerships unveiled.
Meanwhile, U.S. retailers reported solid sales of the Microsoft Xbox console, and many ran out of the $299 device by the end of the day.
The brisk sales appeared to confirm early expectations that video games would flourish as a relatively cheap form of home entertainment in a weak economy.
With Nintendo’s GameCube, due to be released today, U.S. consumers are expected to shell out close to a quarter of a billion dollars on video games over the next few weeks.
Lutz is GM’s New Driving Force
There was a major change in the driver’s seat at General Motors Corp., with product development guru and Vice Chairman Robert Lutz taking over GM North American from Ronald L. Zarrella, who resigned after seven years with the company.
Zarrella, a marketing star who championed “brand management” that stressed image over product, left to become chief executive at Bausch & Lomb, his former employer.
Lutz, 69, a vice chairman of the former Chrysler Corp. who earned a reputation as having a golden instinct for what works and what flops with car design, was hired by GM in September to jazz up GM’s vehicle lineup, primarily passenger cars.
While Zarrella was in charge of the crucial North American market, Lutz had quickly instigated changes in the design of the upcoming Cadillac STS and Pontiac Grand Prix sedans.
Hoffa Declares Victory as Teamsters President
James P. Hoffa declared victory in his re-election as president of the International Brotherhood of Teamsters, fending off a challenge from the leader of a Teamsters local in Oregon.
With most of the votes counted by Friday afternoon, Hoffa had 65% of the vote to 35% for challenger Tom Leedham, election administrator Bill Wertheimer said.
Hoffa led Leedham by a margin of more than 2 to 1. The ratio was consistent throughout the federally supervised count.
The union has about 1.4 million members, but only a quarter of them voted in the mail-in election.
Leedham, who lost to Hoffa three years ago, ran on a reformist platform, pledging to cut executive salaries and encourage more rank-and-file involvement in the union.
Judge Rules in Talent Manager’s Favor
A Los Angeles civil lawsuit that was being closely watched by the entertainment industry ended with Los Angeles County Superior Court Judge Julius Title ruling that 28-year-old actor Jason Behr failed to prove his case against onetime manager Marvin Dauer.
Behr had sued his manager in order to get out of his contract, using a decades-old law that prevents managers from procuring work for their clients. Behr contented that Dauer acted more like an agent and arranged auditions for him.
The judge ruled that the actor failed to establish that Dauer broke the law but did not rule on how much money, if any, Behr owes in commissions to his former manager.
Some were watching the case as a test of California’s restrictive rules on talent managers. Actors typically hire both an agent and a manager, but their roles often become blurred because they share a financial interest.
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For a preview of this week’s business and economic events, please see Monday’s C2.
