– October 23, 2014

Govt, states try to block proposed airline merger

(AP) — The federal government is trying to block the proposed merger of American Airlines and US Airways, saying it would cause "substantial harm" to consumers by leading to higher fares and fees.

The U.S. Justice Department, joined by the attorneys general of six states and the District of Columbia, filed a lawsuit to block the merger Tuesday in federal court in Washington, D.C.

The airlines said the government's conclusions were wrong, and they vowed to use "all legal options" to fight back.

The government's action threatens to quash a deal that would create the world's largest airline by passenger miles. The airlines could challenge the government in court, or possibly agree to concessions that would convince regulators to approve the merger.

The lawsuit caught many observers by surprise. In the last five years, antitrust regulators had allowed three other major airline mergers to go ahead, leaving five airlines in control of about 80 percent of the domestic market. But the government argued that this merger would hurt consumers around the country by eliminating a competitor on more than 1,000 routes. Mergers have helped the industry limit seats, push fares higher and return to profitability.

Last year, business and leisure travelers spent more than $70 billion on airfare in the United States. Consumer advocates cheered the lawsuit.

"This is the best news that consumers could have possible gotten," said Charlie Leocha, director of the Consumer Travel Alliance and member of a panel that advises the government on travel-consumer issues.

In its lawsuit, the department said that if the merger leads to even small increases in ticket prices or airline fees, it would cost American consumers hundreds of millions of dollars each year,

As examples, the government cited round-trip fares for travel this month between Miami and Cincinnati and between Houston and New York in which US Airways' fares are far lower than American and other competitors.

In making its case against the merger, the government relies heavily on an airlines executives own words.

Throughout the 56-page lawsuit, Department of Justice lawyers quote internal emails, investor presentations and public comments by the two airlines' top executives noting how past mergers have allowed for increased fares and rising fees for checking a bag or changing flights.

For instance, the suit recalls how US Airways President Scott Kirby noted in 2011 that past mergers had paved the way for the airlines to push through three successful airfare hikes that year.

Shares of both airlines plunged on news of the lawsuit. US Airways Group Inc. shares fell $1.92, or 10.2 percent, to $16.90 in afternoon trading. Shares of American Airlines parent AMR were taken off the New York Stock Exchange shortly after the company filed for bankruptcy protection in late 2011 but still trade over the counter; they were down $2.82, or 48.5 percent, to $2.99.

The companies issued a statement criticizing the Justice Department's conclusions and arguing that together they would create a stronger network of flights that gives travelers more choices.

In a letter to AMR employees, CEO Tom Horton said both companies tried to convince the Justice Department that the deal would be good for their customers and for airline competition.

"Since the DOJ has formed a contrary view, the matter will now be settled by the courts," Horton said, a process he said would "likely take a few months."

The airlines had already announced the management team at the combined company, which would be called American Airlines Group Inc. and led by US Airways CEO Doug Parker. Those plans are now on hold.

The lawsuit will not necessarily stop the deal. The airlines could fight back in court, but it might not even get that far.

Analysts said that the Justice Department could be seeking more time and leverage to squeeze out some concessions. Many experts had expected regulators to pressure American and US Airways into giving up some takeoff and landing slots at Reagan National Airport, allowing for new competitors at the busy airport, which is just across the Potomac River from Washington.

Even outside the two companies, many in the airline industry had expected that the deal would easily win regulatory approval like Delta's purchase of Northwest, United's combination with Continental, and Southwest's acquisition of AirTran.

Justice Department officials "didn't have any problem with the Northwest-Delta merger; didn't have any problem with United-Continental. Where did they think it was going to go?" said Robert Mann, an airline consultant who once worked at American.

At the least, the lawsuit could delay AMR's exit from bankruptcy and make a merger slightly less likely, said Daniel McKenzie, an analyst for Buckingham Research Group.

AMR and US Airways announced in February that they planned to merge into a carrier with 6,700 daily flights and annual revenue of roughly $40 billion. By passenger traffic, it would slightly eclipse United Airlines and Delta Air Lines. Along with Southwest Airlines, the deal would leave four airlines dominating the U.S. market.

AMR and US Airways officials had said their merger would help consumers by creating a tougher competitor for United and Delta.
AMR has cut labor costs and debt since it filed for bankruptcy protection. Pilots from both airlines have agreed on steps that should make it easier to combine their groups under a single labor contract, a big hurdle in many airline mergers.

A federal bankruptcy judge in New York was scheduled to hold a hearing Thursday to consider approving AMR's reorganization plan — one of the last steps before the merger would be completed. The hearing was expected to go ahead. The merger has been approved overwhelmingly by AMR creditors and shareholders and by US Airways shareholders.

In its lawsuit, the Justice Department was joined by the attorneys general from American's home state of Texas, US Airways' home state of Arizona, plus Florida, Virginia, Pennsylvania, Tennessee and the District of Columbia.

Do you feel the U.S. is prepared for a possible ebola outbreak?


gordonwebstergordonwebster Gordon Webster - Publisher
gordonwebstergordonwebster Gabriel Dillard - Managing Editor

Latest Local News

Written on 10/23/2014, 8:59 am by Business Journal staff
Central Valley foreclosure rates continue to be lower than the national average, according to new data from CoreLogic.
Written on 10/22/2014, 4:33 pm by Business Journal staff
The City of Hanford was recognized along with consultants Quad Knopf and Zumwalt-Hansen & Associates for a plan to revitalize the city's eastern downtown and entrance. Given out by the American Planning Association, California Chapter Central Section, the Planning Award of Merit praises the City of Hanford for its comprehensive planning of a small jurisdiction. Sharing in the praise are Visalia engineering firm Quad Knopf and Hanford-based Zumwalt-Hansen & Associates, who worked with the city on the Hanford Downtown East Precise Plan. The plan included policies and strategies to revitalize a 17-block section of Hanford's east downtown and entrance to the city, with suggested urban design, parking and other improvements. Specifically, the plan serves as a guide for city leaders on zoning for mixed use and permitted land uses for the area, along with form-based code for frontage types for commercial, mixed use and residential buildings. It also contains development regulations, landscape guidelines, street improvements, traffic calming guidelines, parking policies, technical studies for noise, traffic, cultural resources and air quality and a focused environmental impact report. One of the major focuses of the project was the China Alley Revitalization Plan, which aims to improve an area identified as one of 2011's Most Endangered Places in America by the National Trust for Historic Preservation. Besides the Hanford Downtown East Precise Plan itself, the award recognizes the City of Hanford for its extensive public outreach plan, numerous steering committee and community workshops, along with a one-mile walking tour of the area, to gather input and comments from the public. The Planning Award of Merit will be presented to the city at the Hanford City Council meeting on Oct. 71 at 7 p.m. in the Hanford Civic Auditorium, 400 N. Douty St. in Hanford.
Written on 10/22/2014, 2:14 pm by Associated Press
(AP) — Visa Inc. says it will increase its quarterly dividend by 20 percent. The Foster City, California-based global payments company said Wednesday that it will pay a quarterly dividend of 48 cents per share on Dec. 2 to its class A shareholders of record as of Nov. 14. That is up from its most recent dividend payment of 40 cents per share. The quarterly dividend increase raises the annual dividend rate from $1.60 per share to $1.92 per share. Shares of Visa Inc. fell $2.39, in line with market activity, to close at $210.92.
Written on 10/22/2014, 2:13 pm by Brian Melley, AP Writer
(AP) — A federal judge has fined a California company $25 million for misleading 110,000 people to buy into a work-at-home scheme that almost never paid off. U.S. District Judge Dean Pregerson banned The Zaken Corp. on Wednesday from advertising or selling work-at-home business opportunities in the future. The Justice Department says the Thousand Oaks company claimed associates who purchased a $148 business plan could earn $3,000 to $6,000 in a few hours by locating excess inventory that Zaken would sell. Customers often received very little in return, including an outdated telephone directory of mostly defunct businesses. Pregerson says fewer than 1 percent of customers earned any income. Prosecutors say the company aggressively tried to sell additional business tools for hundreds or thousands of dollars. A telephone listing for the company was disconnected.
Written on 10/22/2014, 2:11 pm by Business Journal staff
Two Fresno organizations were awarded $20,000 each from Pacific Gas & Electric Co. as part of the utility's program to support economic and job creating efforts throughout its Northern and Central California territory. Now in its second year, PG&E's Economic Vitality Grant Program is investing $200,000 to support the work of 10 organizations that prop up small businesses and promote workforce development. Among them, the Fresno Career Development Institute will use its $20,000 grant to support job skill training and career pathway support for 20 single mothers and fathers from underserved communities. Another $20,000 will go to the UC Merced Small Business Development Regional Network in Fresno to support training for business consultants available to local entrepreneurs and small businesses. Other grantees include the Kern Economic Development Corporation, Butte County Economic Development Corporation, the City of Monterey, United Roots in Oakland, Mujeres Unidas y Activas in San Francisco, America’s Job Center of California in San Luis Obispo, New Vision Santa Rosa and the Downtown Stockton Alliance. The nonprofit organizations were selected out of nearly 130 applications based on factors like community need, strength of plans presented and demonstrable links to job creation.
Written on 10/22/2014, 2:09 pm by Associated Press
(AP) — Stocks are ending lower, breaking a four-day winning streak, as a drop in the price of oil dragged energy companies lower. The energy sector in the Standard & Poor's 500 index sank 1.7 percent, more than twice as much as the rest of the market. Small-company stocks and transportation shares also fell sharply as traders unloaded riskier assets. The market started higher, then turned lower at midday as the price of oil fell. Traders have worried about a steady decline in the price of oil as global demand for energy recedes. The S&P 500 index fell 14 points, or 0.7 percent, to 1,927 Wednesday. The Dow Jones industrial average gave up 153 points, or 0.9 percent, to 16,461. The Nasdaq composite fell 36 points, or 0.8 percent, to 4,382.
Written on 10/22/2014, 1:45 pm by Business Journal staff
Property values in the southern San Joaquin Valley increased 5.5 percent in the last year, the state Board of Equalization reported. The region, made up of Fresno, Kern, Kings and Tulare counties, combined for $3.96 billion in assessed property values in 2014-15, an increase of $206.4 million over 2013-14. Fresno County had a 5.7 percent growth in assessed value, while Tulare County grew 4.8 percent, Kings County grew 1.1 percent and Kern County grew 5.9 percent. "Higher property values are an encouraging sign that California's economic recovery is finally gaining traction throughout our state," said BOE Member George Runner, who covers the agency's second district. "This is good news, especially for homeowners still underwater and workers who still need jobs." Statewide, the total value of state and county assessed property increased for the fourth straight year, rising 6.1 percent from the previous year to $4.918 trillion. The value of state-assessed property, mainly privately owned public utilities and railroads, totaled $93.3 billion in the latest year for a 2.7-percent increase. In all, 55 out of 58 counties posted year-over-year increases in assessed value, with most of those increases being more than 2 percent.
Written on 10/22/2014, 12:13 pm by Business Journal staff
China Peak Mountain Resort will be conducting a hiring fair all day Friday and Saturday at Sierra Vista Mall in Clovis. Representatives from the resort will be at the former Gottschalks location at 1200 Shaw Ave. from 9 a.m. to 6 p.m. on Oct. 24 and 25. China Peak is hiring for the 2011-2012 winter season and needing to fill more than 300 positions. Available positions include:• Building and yard/janitorial crew• Cashiers/guest services• Food service• Hotel personnel• Lift attendants• Parking attendants• Purchasing/warehouse• Rental technicians• Ski/snowboard instructors• Terrain park crew A banner will be displayed outside the building, which is east of the mall entrance. For those that miss the event, another job fair will be held at China Peak on Nov. 8 from 9 a.m. to 5 p.m. Employees at the resort benefit from free skiing and riding privileges, plus discounts on food and services. More information about employment opportunities can be found online at www.skichinapeak/employment.aspx. China Peak is located about 65 miles northeast of Fresno near Huntington Lake. The 1,400-acre resort was long known as Sierra Summit before former employee Tim Cohee acquired it in 2010.
Written on 10/22/2014, 11:38 am by 
MICHAEL LIEDTKE, AP Business Writers
(AP) — So long Silicon Valley. These days entrepreneurs and engineers are flocking to a place better known for wave surfing than Web surfing. Amid the palm trees and purple sunsets of the Southern California coastline, techies have built "Silicon Beach." In the past few years Google, Microsoft, Facebook, and YouTube have opened offices on the west side of Los Angeles from Santa Monica south to Venice and Playa del Rey. They are joined by hundreds of startups including Hulu, Demand Media and Snapchat, which nixed a $3 billion takeover offer from Facebook. Major Hollywood players like The Walt Disney Co. and Time Warner Inc.'s Warner Bros. have launched startup accelerators to help local tech entrepreneurs. The city of Los Angeles even hired its first chief technology officer, former Qualcomm executive Peter Marx, earlier this year. "Historically, Silicon Valley has been the center of gravity for tech and startups but I think more and more, these types of companies can be built anywhere," says Erik Rannala, who moved from San Francisco to Los Angeles with his entrepreneurial partner William Hsu several years ago. Rannala and Hsu oversee MuckerLab, a technology incubator in Santa Monica, California, that has invested in 45 startups such as flower marketplace BloomNation and online tuxedo rental outfit The Black Tux. Many of the ideas for the companies were hatched in MuckerLab's concrete-walled space, which is covered with white boards and sticky tabs. The vibe is eclectic. No office-park chic here. Companies allocate ample space for bikes and surfboards so employees can hit the beach after work. Social media software maker Epoxy TV, founded by Juan Bruce and Jason Ahmad, is located in a Venice complex formerly owned by the late actor Dennis Hopper. They still get his mail. One of Hopper's sculptures adorns the yard and inside, there's a staircase to nowhere designed by renowned Los Angeles architect Frank Gehry. The Venice scene also has helped online razor service Dollar Shave Club recruit employees, according to founder and Philadelphia native Michael Dubin. "It's very different to be at the heart of Venice than to be in the heart of Mountain View," says Epoxy TV's Ahmad. "Culturally it's just a vastly different place." What's happening here is part of a growing movement of U.S. cities seeking to duplicate the formula that turned northern California's Silicon Valley, slightly south of San Francisco, into a mecca of society-shifting innovation and immense wealth. Cupertino-based Apple Inc., Mountain View's Google Inc. and Menlo Park-based Facebook Inc. collectively have created more than $1 trillion in shareholder wealth while routinely paying employees six-figure salaries, generous benefits and stock options that can generate multimillion-dollar windfalls. All the prosperity has caused the cost of living in Silicon Valley to soar. It's nearly impossible to buy even a small home for less than a $1 million in San Francisco and many other nearby cities. Tiny apartments can cost $2,500 to $3,500 per month. Prices like those are one more reason that less expensive, but still enticing places like Los Angeles make sense to tech entrepreneurs, says Chris DeWolfe, who runs a rapidly growing company called the Social Gaming Network in Beverly Hills. "It's more affordable to live almost anywhere in Los Angeles, and you still get a great variety of life here with an amazing culture, super beaches and great hiking," DeWolfe says. "And the sun is almost always shining." The only thing that remains as a major benchmark for Los Angeles is to give birth to a city-defining company in the same way that Facebook, Google and Apple have defined Silicon Valley, or how Amazon and Microsoft have reshaped Seattle. On the other opposite side of the U.S., New York's "Silicon Alley" has been a high-tech cove for the past 15 years. Boston and Washington D.C. also have had some success cultivating a vibrant technology scene, though neither city has coined a catchy nickname that has stuck. Billionaire Steve Case, who co-founded AOL Inc. in Virginia, is trying to spread the tech gospel in U.S. cities that have been brushed off as rusty relics of a bygone industrial era. In June, Case visited more than 100 entrepreneurs and startups during a bus tour of Detroit, Pittsburgh, Cincinnati and Nashville, Tennessee that he called the "Rise of the Rest." This month he followed up with another round of technology-preaching stops in Minneapolis, St. Louis, Madison, Wisconsin; Des Moines, Iowa; and Kansas City, Missouri. "This tech phenomenon in other parts of the country besides Silicon Valley is only going to increase as it becomes easier and cheaper to start companies," Case predicts. DeWolfe said he had trouble luring technology engineers to Beverly Hills a decade ago when he was trying to expand MySpace, the social networking forerunner to Facebook that he co-founded. That's no longer a problem now that there's a steady stream of local students graduating with engineering degrees from local colleges like CalTech, UCLA and USC, says Marx, Los Angeles' chief technology officer. Those students are flocking to local universities inspired by southern California's own success stories, including Internet search engine Overture Services of Pasadena, which Yahoo Inc. bought for $1.3 billion; MySpace, which News Corp. bought for $650 million; YouTube channel producer Maker Studios of Culver City, which sold to Disney in May for up to $950 million; and virtual reality headset maker Oculus of Irvine, which agreed to a $2 billion sale to Facebook in March. Meanwhile, venture capitalists continue to pour more money into Southern California startups. In the first nine months of this year, venture capitalists invested $1.6 billion in startups based in Los Angeles County and neighboring Orange County. That's up 26 percent from the same time last year, according to figures compiled by PricewaterCoopers and the National Venture Capital Association.That's still a pittance compared to Silicon Valley, where venture capital investments nearly doubled to $17 billion during the same period. DeWolfe, who shuttles between Social Gaming Network's Beverly Hills headquarters and a San Francisco office, doubts Silicon Beach will ever come close to matching Silicon Valley's technology prowess. "There is something about Silicon Valley lore that you will never be able to reproduce, no matter how much you say you want to," he says. That doesn't mean Silicon Valley can't be toppled from its perch, Case cautions. "It's important to never get cocky or complacent. Fifty or 60 years ago, Detroit was like the Silicon Valley of its day. You have to constantly attract talent and constantly innovate."___Liedtke reported from San Francisco.
Written on 10/22/2014, 11:35 am by TOM KRISHER, AP Auto Writer
(AP) — The U.S. government is now urging owners of nearly 8 million cars and trucks to have the air bags repaired because of potential danger to drivers and passengers. But the effort is being complicated by confusing information and a malfunctioning website. The government's auto safety agency says that inflator mechanisms in the air bags can rupture, causing metal fragments to fly out when the bags are deployed. The inflators are made by Japanese parts supplier Takata Corp. Safety advocates say at least four people have died from the problem, which they claim could affect more than 20 million cars nationwide. On Wednesday, the National Highway Traffic Safety Administration added 3.1 million more vehicles to an initial warning covering 4.7 million cars and SUVs. Car owners might have difficulty determining if their vehicle is equipped with the potentially dangerous air bags. The warning covers certain models made by BMW, Chrysler, Ford, General Motors, Mazda, Honda, Mitsubishi, Nissan, Subaru and Toyota. Most of the 7.8 million vehicles are subject to existing recalls. But manufacturers have limited the recalls to high-humidity areas, excluding cars and trucks in states to the north. NHTSA says owners in Florida, Puerto Rico, Guam, Saipan, American Samoa, the U.S. Virgin Islands, Hawaii and "limited areas near the Gulf of Mexico in Texas, Alabama, Mississippi, Georgia, and Louisiana" should pay special attention to the warning. Worse yet, the regulatory agency has twice corrected the number of vehicles affected and acknowledged that a list it released Monday wasn't completely accurate. The agency urged people to use its website to see if their cars are affected — but a feature allowing people to check for recalls by vehicle identification number malfunctioned Monday night and still wasn't operational Wednesday. Automakers have been recalling cars to fix the problem for several years, but neither Takata nor NHTSA have identified a firm cause. The agency opened a formal investigation into the problem in June, and a theory put forth in agency documents suggests the chemical used to inflate the air bag can be altered by high humidity, making it explode with too much force while deploying. "It's in a total state of uproar right now," said Clarence Ditlow, executive director of the Center for Auto Safety, a nonprofit advocacy group founded by Ralph Nader. NHTSA Deputy Administrator David Friedman said in a statement that responding to the recalls is essential to keep people safe. "It will aid in our ongoing investigation into Takata air bags and what appears to be a problem related to extended exposure to consistently high humidity and temperatures," he said. The agency, he said, is tracking down the "full geographic scope" of the issue. Kathryn Henry, a spokeswoman for the safety agency, said it is unclear whether a high number of inquiries caused its website to malfunction. Until it's repaired, she urged car owners to go to manufacturer websites or call their car dealer. General Motors, which sold two models with the faulty air bags, planned to notify about 10,000 customers by overnight mail. The models covered are 2003 to 2005 Pontiac Vibes in high humidity areas and Saab 9-2X models. The cars were made by other manufacturers — the Vibes by Toyota, and the Saabs by Subaru. The rare warning by regulators comes three weeks after a Sept. 29 crash near Orlando, Florida, that claimed the life Hien Thi Tran, who suffered severe neck wounds that investigators said could have been caused by metal fragments flying out of the air bag on her 2001 Honda Accord. Her Accord was among the models being recalled. One police agency concluded that the air bags caused her wounds, while another is still investigating. NHTSA is seeking information in the case. On Monday, Toyota issued a recall covering passenger air bags in 247,000 older model vehicles including the Lexus SC, Corolla, Matrix, Sequoia and Tundra. Like many earlier recalls, Toyota's recall covers vehicles only in areas that have high absolute humidity. GM and Toyota each told customers not to let anyone sit in the front passenger seat until repairs are made. Toyota said it's working with Takata to pinpoint the cause of the rupture and to gauge the influence of high absolute humidity, which is a measurement of water vapor in the air.

Latest State News

Written on 10/22/2014, 2:14 pm by Associated Press
(AP) — Visa Inc. says it will increase...
Written on 10/22/2014, 2:13 pm by Brian Melley, AP Writer
(AP) — A federal judge has fined a...
Written on 10/22/2014, 11:38 am by 
MICHAEL LIEDTKE, AP Business Writers
(AP) — So long Silicon Valley. These...
Written on 10/22/2014, 11:31 am by The Associated Press
(AP) — Google is introducing an...

Latest National News

Written on 10/22/2014, 2:09 pm by Associated Press
(AP) — Stocks are ending lower,...
Written on 10/22/2014, 11:35 am by TOM KRISHER, AP Auto Writer
(AP) — The U.S. government is now...
Written on 10/22/2014, 11:33 am by BARBARA ORTUTAY, AP Technology Writer
(AP) — A new study confirms what many...
Written on 10/22/2014, 11:26 am by TOM KRISHER, AP Auto Writer
(AP) — The U.S. government has told BMW...