Continental Swings to Profit
Continental Airlines reported a $61 million profit in the third quarter, surprising Wall Street analysts, who had expected a much smaller profit at the nation's fifth-largest carrier because of rising jet fuel prices and two hurricanes that canceled flights. In the comparable period a year ago, Houston-based Continental lost $18 million.
Strong passenger traffic helped boost revenue, which rose 15.3 percent, to a record $3 billion from $2.6 billion a year earlier. Continental's fuel costs rose 65 percent, to $684 million for the July-to-September quarter, and were the airline's biggest expense.
New York Settles WorldCom Claim
New York City will collect $78.9 million under a legal settlement with Citigroup, J.P. Morgan Chase and other banks that underwrote bonds of WorldCom in 2000 and 2001, city officials said. Investors claimed in their suits that the banks assisted WorldCom in the fraud or should have discovered wrongdoing. The city had decided not to participate in a class-action lawsuit that was settled with a $6.1 billion deal that investors reached with WorldCom's underwriters, former directors and other defendants.
City Comptroller William C. Thompson Jr. said its pension funds lost more than $100 million through their investment in WorldCom. Michael Cardozo, the city's top lawyer, said New York recovered significantly more than it would have in the class action.
Humana Settles Class-Action Suit
Humana said it has agreed to pay $40 million to settle a class-action lawsuit brought by more than 700,000 doctors who say they were systematically cheated by many of the nation's major managed-care companies. Humana also said it will pay as much as $18 million in legal fees if a judge approves the deal, which recognizes that Humana has spent more than $75 million to upgrade its claims process.
The doctors' suit contends that managed-care companies programmed computers to pay for less intensive services than were actually provided. The remaining firms -- United Healthcare, Coventry and PacifiCare -- could go to trial in January unless they also reach settlements.
PBGC Premium Hike Advances
A Senate panel voted to more than double the premiums paid by companies to the Pension Benefit Guaranty Corp., the quasi-governmental agency that insures defined-benefit retirement plans. Pressure to overhaul pension-funding rules has mounted since US Airways and United Airlines dumped their pensions on the PBGC with more than $10 billion in underfunding between them. The Labor Department estimates that companies underfunded their pension plans by $450 billion last year. The PBGC last year reported a deficit of $23.3 billion.
Safeway, the nation's third-largest supermarket chain, said its third-quarter profit fell 23 percent, to $122.5 million from $159.2 million in the comparable quarter last year, mostly because of a charge linked to a restructuring of its Texas operations and an employee buyout in Northern California. Sales rose 7.2 percent, to $8.95 billion.
Johnson & Johnson said its third-quarter profit rose 12 percent, to $2.63 billion from $2.34 billion. Revenue rose 7 percent, to $12.31 billion. The medical-devices segment posted a 14.3 percent rise in revenue, to $4.6 billion, on strong sales of its Cypher drug-coated heart stent.
Merrill Lynch reported a 49 percent jump in its third-quarter earnings, to $1.38 billion from $922 million, citing strong returns on both stock and bond investments. Revenue climbed 38 percent, to $6.69 billion.
Kraft Foods, the largest U.S. food manufacturer, said third-quarter profit fell 13.5 percent, to $674 million from $779 million, because of high commodity and energy costs. Revenue grew 4.4 percent, to $8.1 billion.
United Technologies said third-quarter profit rose 19 percent, to $821 million from $693 million. Revenue rose 17 percent, to $10.91 billion, as sales at the recently acquired Linde commercial refrigeration and Kidde fire protection businesses increased 6 percent.
Wells Fargo's third-quarter profit rose 13 percent, to $1.98 billion from $1.75 billion, as the bank continued to feed consumers' appetites for home mortgages and a variety of other loans. Revenue rose 16 percent, to $8.5 billion.
Compiled from staff and news service reports.