) CEO warned Sept. 8 he would put the money-losing carrier in Chapter 11 if he can't win huge concessions from pilots and creditors by month's end.
A Delta director who took over as CEO on Jan. 1, Grinstein has turned around companies before, including Western Airlines. And he is doing a lot to cut Delta's sky-high costs. Grinstein says he will dump up to 7,000 employees, or 10% of Delta's payroll, and reduce pay and benefits for the remainder. Some of those jobs will be in Dallas/Fort Worth, where a hub is being closed. All told, Grinstein says, Delta must cut $2.7 billion in overhead by 2007. "We have no time to waste," he told workers.
Grinstein has asked Delta's unionized pilots to find $1 billion in savings. So far they've refused to go along, despite earlier tough talk from the chief. Stuart Klaskin, a Miami-based airline consultant, puts odds of Delta bankruptcy at 50-50. Back in October, it appeared as if former Credit Suisse First Boston (CSR
) investment banker Frank Quattrone had dodged a bullet when a Manhattan jury failed to convict him on charges of obstructing of justice and witness tampering. But federal prosecutors brought their cases a second time, won a conviction, and on Sept. 8 were rewarded with an 18-month prison sentence for Quattrone. The 48-year-old Silicon Valley native faced a maximum of 16 months under federal guidelines. But U.S. District Judge Richard Owen was tougher because he said it was "crystal clear" that Quattrone committed perjury. Quattrone is appealing his conviction. Even as discounters such as Wal-Mart Stores (WMT
) feel the bite of high energy costs and weak job growth, one retail sector shows no signs of slowing: Luxury. Designer emporium Neiman Marcus Group (NMG
) reported on Sept. 7 that fiscal fourth-quarter profits more than doubled, to $21 million, or 42 cents a share, on a 12% boost in revenue. The same day, upscale leather goods retailer Coach (COH
) raised its earnings forecast, buoyed by robust sales. It now expects fiscal-year earnings of at least $1.71 a share, up from the $1.68 it had previously projected. Analysts expect the momentum to continue through the holiday. As the services sector has grown, the U.S. government has lagged in compiling timely statistics on how businesses such as architects and telecom outfits are faring. That's about to change. On Sept. 13, the U.S. Census Bureau will release a new quarterly survey of revenues of service-producing companies. The survey, the Bureau's first new economic indicator in nearly 40 years, will initially cover the information technology industry, including newspaper and software publishers; professionals like lawyers and ad agencies; and such support services as travel agents and employment agencies. These industries account for some 14.6% of gross domestic product. In what could be the last big settlement in the mutual-fund trading scandal, Invesco Funds Group and AIM Advisors agreed to pay regulators $450 million to resolve charges that they illegally permitted rapid in-and-out trades by favored investors. Under the terms of the tentative deal, Invesco will pay $325 million and AIM Advisors will pay $50 million. Both companies, owned by British fund manager Amvescap, also agreed to lower their fees by $75 million over the next five years. "We deeply regret the harm done to fund investors and have taken strong measures to prevent any recurrence," said Charles Brady, chairman of Amvescap (AVZ
). The pact was negotiated with the attorneys general of New York and Colorado and the Securities & Exchange Commission. -- GM raised cash incentives by between $500 and $1,000 on most 2005 models.
-- Texas Instruments (TXN
) reduced its forecast for third-quarter sales to between $3.1 billion and $3.24 billion.
-- U.S. Airways Group (UAIR
) failed to reach a deal with pilots, moving closer to bankruptcy. Avon Products (AVP
) came calling on Sept. 8, and Wall Street didn't like what it heard. Investors knocked 6% off shares, to $42.86, after Avon said third-quarter U.S. sales would be flat. But it noted stronger foreign revenues would offset the weak stateside results.