Delta CFO Argues for Cost Cuts
Delta Air Lines needs the $3 billion in annual cost savings from its reorganization plan to survive, Chief Financial Officer Edward H. Bastian told a federal bankruptcy court. "In my opinion, it [the cost reduction plan] is absolutely necessary," Bastian said during the third day of a hearing on Delta's request to void its contract with pilots and impose $325 million in annual wage cuts.
The Air Line Pilots Association, the union representing the pilots, has offered $90.7 million in concessions and has threatened a strike if the court grants Delta's request.
Firm to Buy Largest Shareholder
American Pharmaceutical Partners said it is buying its largest shareholder, privately held American BioScience, for stock worth about $4.1 billion, creating a biopharmaceutical company with annual revenue of more than $500 million.
The new company will be named Abraxis BioScience and will have worldwide rights to cancer treatment Abraxane, which is marketed in the United States for metastatic breast cancer and is being developed for other breast, lung, ovarian, prostate, melanoma, and head and neck cancers in more than 74 clinical trials, including seven Phase III studies.
Sovereign CEO Blasts 'Campaign'
Sovereign Bancorp chief executive Jay Sidhu decried a fund's "massive media campaign" against his bid to sell a stake in Sovereign to Santander Central Hispano and use proceeds to help buy Independence Community Bank. Sidhu did not name the fund.
Sidhu's letter to investors was the latest salvo in a six-week battle with some of his biggest shareholders over the bank's planned deal. Last week, he won approval to proceed with the sale without a regulatory vote, overcoming arguments by investors that the move would entrench management and block a higher bid.
Part of Collins & Aikman Sold
Billionaire investor Wilbur Ross's auto parts venture agreed to buy most of Collins & Aikman's European operations for more than $100 million in cash.
The deal involves the assumption of an undisclosed amount of Collins & Aikman's liabilities and should be completed during the first quarter, Ross said in an interview conducted by Bloomberg News. The factories generate annual sales of about $600 million.
Ross is building an auto parts company called International Auto Components Group that will make plastic, metal and safety parts for cars and trucks.
T-bill rates were mixed. The discount rate on three-month Treasury bills auctioned yesterday fell to 3.9 percent from 3.94 percent last week. Rates on six-month bills were unchanged at 4.16 percent. The annualized return to investors is 3.99 percent for three-month bills, with a $10,000 bill selling for $9,901.42, and 4.3 percent for a six-month bill selling for $9,789.94. Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, fell to 4.3 percent last week from 4.36 percent the previous week.
Compiled from staff and news service reports.