Business and Finance

WASHINGTON–UAL Corp. and US Airways Group Inc. are in advanced merger talks prompted by Continental Airlines Inc.’s decision this weekend to walk away from similar talks with UAL, according to sources with knowledge of the matter.

A deal could be finalized within the next few weeks and could include meaningful capacity cuts, the sources added yesterday. UAL, parent of United Airlines, is also thinking about broadening its global alliance network instead of striking a merger.

"It’s probably going to get done," said Ray Neidl, an analyst with Calyon Securities.

United and US Airways failed in a merger bid in 2001 over competition concerns. Several insiders said a new merger proposal would be different due to changes the two carriers made while in Chapter 11 bankruptcy protection and due to the recent growth of low-cost carriers.

United had been in talks with Continental, which on Sunday pulled out to explore a potential marketing alliance with AMR Corp.’s American Airlines and British Airways PLC.

Continental called off talks because of United’s weak financial condition and a feeling that a merger would risk Continental’s own financial health, a source told Reuters on Sunday.

Continental’s decision came as a surprise to United, which had hoped to reach a deal possibly this week, one of the sources said.

Glenn Tilton, chief executive of UAL and a strong proponent of consolidation, did not address the US Airways situation in a message to employees.

"We continue to evaluate our options and will do what is right for United," Tilton said.

Sources described the United/US Airways talks as advanced or very advanced, but there was no indication they were at the stage that UAL had reached with Continental.

All sources said UAL and US Airways still had a lot of work to do.

Most of the United States legacy airlines face few options to counter skyrocketing fuel prices, tougher competition and rapidly deteriorating finances payday advances payday loan.

The carriers are under pressure internally and from investors to merge or take other steps to help themselves.

With news that UAL and US Airways have accelerated discussions, all four major carriers that overhauled themselves in bankruptcy protection this decade – UAL, US Airways, Delta Air Lines Inc. and Northwest Airlines Corp. – have either reached agreement to pair off or are trying to do so.

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ATLANTA–Business-class niche carrier Eos Airlines Inc. ceased operations yesterday after filing for bankruptcy protection, the latest casualty of a credit crunch and a money-losing airline industry that has been hit hard by high fuel prices.

Smaller carriers like Eos face stiff competition from deeper-pocketed large airlines that offer business-class service along similar routes.

While business class service can be very profitable, it’s also a very thin market, airline experts say. Eos said its main problem was cash to keep it going.

"It’s no surprise," Calyon Securities airline analyst Ray Neidl said. "We saw it happen with other smaller, undercapitalized airlines http://paydayloans-on.com payday advance lenders. Basically, there are too many airlines. We’re in a period of consolidation. The weaker guys, with $120-a-barrel oil, are finally succumbing." One of Eos’ main rivals, MAXjet Airways, stopped flying in December.

In another airline development yesterday, Continental Airlines Inc. said it would not pursue a combination with another carrier right away, a surprising move after weeks of growing speculation that it would join with United Airlines to create the world’s biggest airline.

From Star wire services

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NEW YORK–Oil prices rose sharply yesterday on news that a ship under contract to the United States defence department fired warning shots at two boats in the Persian Gulf.

The reports raised concerns that any conflict between U.S. and Iranian forces could cut oil supplies from the region. Light, sweet crude for June delivery leaped to $119.55 (U.S.) a barrel before the contract retreated to settle up $2.46 at $118.52 on the New York Mercantile Exchange.

Yesterday, oil prices were up even before the gulf report as traders digested news of a pipeline attack in Nigeria and a looming refinery strike in Scotland.

In Nigeria, the Movement for the Emancipation of the Niger Delta, or MEND, said its fighters hit an oil pipeline late Thursday, the fourth conduit the group has attacked in the past week. MEND said the pipeline belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesperson confirmed one of its pipelines had been hit, but provided no additional details.

Earlier this week, Shell said an attack cut its Nigerian oil production by about 170,000 barrels a day.

Separately, workers at an ExxonMobil Corp online payday loan bad credit payday loans. joint venture in Nigeria cut production by an unspecified amount to demand more pay.

Adding to the supply concerns, BP PLC said it will shut down a 700,000 barrel-a-day pipeline system that carries oil from the North Sea to refineries in the United Kingdom. The move is in anticipation of a strike at a refinery in Scotland expected to begin tomorrow.

At Toronto-area pumps, meanwhile, gas prices dipped slightly to an average of $1.203 (Canadian) a litre yesterday, down from $1.216 Thursday, according to the website TorontoGasPrices.com, which gets its information from consumers who report in.

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CALGARY – Suncor Energy Inc.'s chief executive said today that he envisions the company extending its reach into U.S. and overseas markets in the coming years, as the firm reported a jump in first-quarter net profits to $708 million from $576 million a year-ago.

CEO Rick George told the company's annual meeting that Suncor would look to expand its market reach in the decades ahead.

"The Gulf of Mexico – home to the world's largest refining complex – is obviously full of potential. Another opportunity is to connect oilsands production, via pipelines and tankers, to California markets and, ultimately to Asia," George said.

"Supplying the energy hungry Asian economies is a more distant proposition. But at Suncor, we've learned to think very much about the long term."

Ahead of the shareholder meeting, Canada's oldest oilsands producer said its profit amounted to $1.50 per diluted share, compared with $1.22 per diluted share during the first quarter of 2007

Analysts were on average predicting net earnings of $1.64 per diluted share.

Revenue in the quarter was $5.99 billion, up from $3.95 billion in the first three months of 2007.

George told reporters after the meeting that California is "the next logical expansion."

He said he supports a proposal by Enbridge Inc. (TSX: ENB) to build a new pipeline to the B.C. coast, where the oil could be shipped by tanker southward.

Suncor (TSX: SU) operates 280 Sunoco gasoline stations and a refinery in Ontario. It has also expanded into Colorado, where it refines and sells Phillips 66-brand gasoline. That product is made from oil the company ships in by pipeline from its oilsands operations in Northeastern Alberta.

The increase in earnings was primarily due to higher price realizations on the company's oilsands sales, as benchmark crude oil prices soared to all-time highs, Suncor said in a release.

George chuckled when asked about a report by that predicted a the price of a barrel of crude could soar as high as US$225 within four years.

"We don't use that internally, I promise you that," he said, adding that the price today of US$116 a barrel is not very sustainable over the long term.

The higher prices during the quarter was partially offset by increased oilsands operating expenses and higher oilsands royalties.

Cash operating costs for each barrel of crude Suncor produces were $31.55 per barrel for the quarter, compared to $26.30 in 2007.

BMO Capital Markets analyst Randy Ollenberger said Suncor's earnings hit his estimates "right on" as higher operating costs were offset by better-than expected downstream performance.

"The operating results were a little bit weaker but the downstream business was better – so for us, that allowed them to hit our numbers," he said.

Scheduled maintenance at both Suncor's Sarnia refinery and oilsands operations is expected to contribute to improved long-term operational performance, the company said.

Suncor expects the work to be completed in early May.

Suncor is planning a $20.6 billion expansion to its Voyageur oilsands project in northern Alberta, which would increase its overall production from 200,000 barrels of oil per day to 550,000 barrels by 2012.

George told shareholders that increasing concern about the oilsands' environmental impact is not "some passing fad" and that responding to those challenges is not "a diversion" to Suncor's core business.

"In the long term, capital intensive businesses like this one, you have to think not just about how you create value but also how you protect that value over the long haul," he said fast cash payday loan no teletrak payday loans. "You have to be able to read the roadmap of public interest and consumer opinion and respond accordingly."

George said Suncor, which has already put $250 million into renewable energy projects, is planning a $500 million investment in the sector over the next five years, with a focus on wind power and biofuels.

"While current rates of return are small compared to our core resource, it wasn't so long ago that people questioned the economics of the oilsands," he said.

Suncor is still weighing how new federal rules on greenhouse gas emissions will affect its business, George said. Under the plan, all oilsands operators will be required to capture their carbon dioxide emissions and store them underground by 2012.

"We have regulations that are coming in on a provincial basis and a federal basis. I think what's very important here is that we don't speculate until those ideas become firm," George said.

"One of the things we're definitely supportive of is a harmonization between federal and provincial. The worst world we can end up in is where you have regulations both federal and provincial and they don't match up."

Suncor shares closed down $1.72 at $114.28 on the Toronto Stock Exchange in trading today.

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Retail sales in Canada fell in February for the first time in five months, with Ontario experiencing the greatest decline, Statistics Canada said today.

The Canadian dollar, already weaker after yesterday’s central bank rate cut, fell further on the the news as economists speculated softer consumer spending could lead to even more rate cuts in future.

However, economists also said the country is still expected to enjoy moderate but buoyant growth this year.

Despite the greater than expected decline, economists said economic growth in Canada remains buoyant.

"While the doom-and-gloomers will jump all over this one month slide, spending is still on track for a quite healthy performance in the first quarter overall and activity is still posting very solid year-on-year increases," senior economists Doug Porter at BMO Nesbitt Burns wrote in a note to client.

"With job growth still chugging along, wages rising, interest rates falling and some modest tax relief flowing, this sales drop does not look like the start of a trend," he added.

Across Canada, sales slipped by a greater than expected 0.7 per cent to $35.5 billion from January, but were 5.3 per cent higher than a year ago, Statistis Canada said payday loans in 1 hour americashadvance.

None of the eight retail trade sectors posted gains, and two posted significant reductions, the federal agency said.

Auto sales fell 1.3 per cent from record levels, while clothing and accessories declined 1 per cent. Furniture and miscellaneous sales also fell, Statistics Canada said.

Ontario experienced the greatest decline, with sales falling 1.6 per cent, possibly due to the near record snowfall and addition of a new Family Day holiday, the agency said.

Consumers were too busy shovelling to shop, Porter suggested.

Coming on the heels of disappointing wholesale sales figures for February, the latest data point to another month of positive, if moderate, economic growth, wrote Dawn Desjardins, senior economist at RBC Financial Group.

Despite the monthly decline, and moderate sales in the middle of 2007, retail sales have been rising at a rapid clip since 2004, the agency said.

Consumer spending on goods, which accounts for half of all consumer spending, is a closely watched indicator of economic growth.

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CHICAGO–Nelson Peltz's Trian Partners said Friday it will seek a special meeting of Wendy's International Inc. shareholders after being informed that two takeover offers for the company by Trian and Peltz's Triarc Cos Inc had been rejected.

Trian said in a regulatory Friday that it also wants any transaction entered into by Wendy's to be approved by all shareholders and not just the special committee of the board of directors that rejected the Trian/Triarc takeover proposals.

Wendy's directors have been weighing a sale of the company since June 2007 under pressure from billionaire investor Peltz, who has been pressing for a better financial performance.

Earlier this month, Wendy's said first-quarter sales at restaurants open at least 15 months fell at both franchised and company-owned locations, hurt by bad weather and an early Easter.

Peltz, whose Triarc Cos Inc owns the Arby's chain, has offered to buy Wendy's and said he planned to seize control of the No 500 fast cash. 3 U.S. hamburger chain's board.

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MILWAUKEE–Global demand for energy efficient buildings helped boost second-quarter earnings 27 percent for building and auto systems maker Johnson Controls Inc., the company reported Wednesday.

The Milwaukee-based company said it earned $289 million, or 48 cents per share, in the quarter ending March 31, compared with $228 million, or 38 cents per share, in the year-ago quarter.

Sales rose 11 percent to $9.41 billion from $8.49 billion a year earlier.

The earnings just beat the expectations of analysts, who had expected earnings of 47 cents per share on revenue of $9.37 billion, according to a poll by Thomson Financial.

Building efficiency sales were up 11 per cent to $3.3 billion due to growing demand for such systems in nonresidential buildings, the company said cashadvance payday loan. The systems improve energy efficiency and reduce greenhouse gas emissions.

Power solutions sales, which includes batteries, leapt 47 per cent to $1.5 billion. The increase was mainly due to higher prices because of increased lead costs, the company said.

Sales of automotive interiors were up 2 per cent to $4.6 billion, but the U.S. sector continued to slump. Sales in North America were down 7 per cent in the sector while sales in Europe were up 9 percent, and in Asia/Pacific, 8 per cent.

The company maintained its expectations for third-quarter earnings of between 74 and 76 cents per share. But Johnson Controls increased by $1 billion its full-year sales prediction, to $39 billion.

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Credential Securities Inc., the investment dealer for Canadian credit unions, is expected to announce a relief plan this week for more than 300 retail investors with savings entangled in the commercial paper crisis.

A restructuring committee, led by Bay Street lawyer Purdy Crawford, gave that assurance during a conference call today as it fielded questions from investors about its plan to rehabilitate the $32 billion market for non-bank asset-backed commercial paper in this country.

About 335 Credential investors hold about $48 million worth of frozen ABCP notes that are subject to a restructuring proposal known as the Montreal Accord. News of a possible bailout follows an announcement by Canaccord Capital Inc. last week that it intends to buy back notes from about 1,430 of its clients.

"Credential is working on a similar proposal and we’re reasonably optimistic that it will be announced in the next few days," Crawford told investors on today’s call payday loans. "As I have said numerous times, I have spoken with many retail note holders and we are sensitive to their concerns."

Credential Securities did not immediately return a message seeking comment. Crawford, however, said that Credential investors should expect to get their principal plus some "accrued interest" in late May. "It will be cash," Crawford said.

Canaccord Capital, whose retail investors make up the bulk an estimated 1,800 individual note holders, said last week it plans to repurchase up to $138 million of ABCP.

Nevertheless, Canaccord’s relief plan remains subject to a successful restructuring of the larger non-bank ABCP market. Investors of all sizes are scheduled to vote on the Crawford committee’s restructuring plan on April 25.

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John Sacke got a surprise when he bought an item online at eBay for $27.99 (U.S.).

After charging it to his PayPal account, linked to his CIBC Visa card, he got a message from PayPal saying he would pay $29.92 in Canadian dollars.

Just after his email arrived, I heard from Ray Ho with a similar complaint. Not only did PayPal convert his eBay purchase into Canadian dollars, but he found an extra markup once he checked his credit card statement.

If you check PayPal’s website, you can find information about its fees for Canadian users.

Here’s what it says about currency conversion:

"The exchange rate is the retail foreign exchange rate as determined by PayPal at the time a transaction is completed. The exchange rate is adjusted regularly, based on market conditions, and includes a 2.5 per cent fee above the rate at which PayPal obtains foreign currency. The 2.5 per cent fee is retained by PayPal. This fee only applies when PayPal performs the currency conversion."

You’re usually given the choice of using PayPal’s currency conversion or your credit card company’s conversion.

So, check with the credit card issuer to see whether it has a foreign exchange fee – most do – and whether it’s less than 2.5 per cent.

The other difference is that when PayPal converts the currency, you can see the rate at the end of your transaction.

If you were making a U.S. dollar purchase yesterday, you would have seen PayPal’s rate as $1.05 (Canadian) for $1 (U.S.).

If you don’t use PayPal’s conversion, you won’t know how much you will be charged until you check your credit card statement.

Is there a way to avoid such fees? I had to track down someone in San Jose, Calif., to get an answer.

"PayPal customers have the ability to add a U.S. bank account to their Canadian PayPal account," says Sara Gorman, a spokesperson for PayPal, which is owned by eBay.

"So, if a Canadian customer wants to make a payment in U.S free instant credit score estimator. dollars, there would be no currency exchange fee for payments originating from a U.S. dollar account."

Just in case you’re confused by the last sentence, she’s saying you have to open a bank account in the United States – not a U.S. dollar account at a Canadian bank.

If you buy occasionally at eBay, you may find it’s not worth the trouble. But check with your Canadian bank to see if it’s affiliated with a U.S. bank and if it can help.

Personal note: As an occasional eBay buyer, I made a winning bid last month on a 1,000-page book, How to Cook Everything Vegetarian by Mark Bittman.

I won it for $11 (U.S.), compared to the Canadian list price of $41.99.

My glee disappeared when I got an invoice from the seller, located in Michigan, for $47.70 (U.S.).

That included shipping and handling via U.S. first class mail ($26.20) and shipping insurance ($10.50).

I asked the seller if there was a cheaper way to ship the book and she said no. "All of this was explained in the listing," she said.

I hadn’t seen any such details – and if I had, I wouldn’t have bid for the item. But not wanting to get negative feedback, I went ahead.

My cookbook arrived last week, packaged beautifully. The final bill was $50.31 (Canadian) after using PayPal’s currency conversion.

The lesson: Always ask about shipping costs to Canada. And find a local source if you can, especially for heavy items.

Write to onyourside@thestar.ca or check the On Your Side blog at www.ellenroseman.com.

 

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OTTAWA–Booming energy and automotive exports pushed the country’s international merchandise trade surplus up by more than $2 billion in February, to $4.9 billion, Statistics Canada reported yesterday.

Overall, exports were up 3.8 per cent, to $39.3 billion and imports fell 2 per cent, to $34.4 billion.

The surplus was the largest recorded since May 2007.

"The hefty jump in the trade surplus is a surprise, but the real eye-opener is the fact that the improvement was driven by volumes, not booming commodity prices," Douglas Porter, the Bank of Montreal’s deputy chief economist, said in a note to clients.

"Given a backdrop of weakening U.S. spending and the loonie at parity (dampening Canadian exports), as well as still-robust Canadian spending trends, the real improvement in trade is nothing short of shocking."

The trade surplus with the United States soared to $8.1 billion, the highest level in more than a year as Canadian exports increased by 3.6 per cent and imports fell 3.4 per cent.

The trade deficit with countries other than the United States narrowed for a second straight month, falling to $3.2 billion due to rising exports to Japan and the European Union.

All sectors reported higher exports in February, with energy and automotive shipments making up two-thirds of the increase.

Automotive exports rose 11.4 per cent to $5.6 billion, the biggest jump since December 2006. Higher shipments of passenger cars powered most of the growth, although exports of motor vehicle parts rose 5 per cent and shipments of trucks and other motor vehicles increased 7.4 per cent.

Energy exports rose for the fourth month in a row, rising 3.8 per cent to a record $9.7 billion, driven by higher shipments of crude petroleum and natural gas absolutely free credit report. Exports of petroleum and coal products, electricity and coal slipped.

Exports of industrial goods and materials rose for the second month in a row, up 2.8 per cent to $8.9 billion, and exports of metals and alloys hit record levels, buoyed by gold prices, which hit a historic high in February.

Meanwhile, metal ore exports rose 12.8 per cent, largely as a result of record exports of iron ores, concentrates and scrap.

Chemical and plastics exports declined 4.3 per cent to $2.7 billion.

Exports of machinery and equipment rose 1.5 per cent to $7.5 billion, pushed by aircraft and other transportation equipment.

Forestry product shipments were up 3.9 per cent, to $2.2 billion, the first rise in 11 months. Agricultural and fishing products rose 1 per cent to a high of $3.1 billion, on record high canola exports.

The majority of import sectors lost ground in February, dragged down by widespread declines in energy products. Imports of machinery and equipment slipped 0.6 per cent to $9.5 billion, while automotive imports advanced 2.7 per cent to $6.3 billion, led by motor vehicle parts.

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